Due diligence checklist for an early startup. What angels ask

An angel investor is a person who invests their own money, often in a first round. Whether your first investor is an angel or a fund, we suggest preparing three things first. This is our advice, not a rule, and each investor has its own list.

• Who owns the work. Intellectual property, or IP, means the code, designs, name and content your company uses. Everyone who built any of it, including contractors and friends, should have signed an agreement that hands it to the company.
• Who owns the company. A cap table is the list of who owns what share of the company. It must match reality, including any shares you promised an advisor in conversation.
• Whether the numbers are real. Every number in your deck or one-pager should match your bank, your payment processor, or your product's own records.

Often lighter than founders expect. In Carta's pre-seed data for the first quarter of 2026, 77 percent of deals used SAFEs, simple agreements for future equity, and 15 percent used priced equity. Source: Carta, State of Pre-Seed, 15 May 2026. With a SAFE, an investor pays now and gets shares later. Priced equity means selling shares at an agreed price now, which usually brings more paperwork.

Carta's figures cover deals visible in Carta's own data, not the whole market. Our reading, which is inference: if you raise on a SAFE, the checking is usually lighter than in a priced round. Lighter does not mean none, so the three basics above still apply.

The item most likely to stall a deal is rarely the one founders worry about. A messy revenue spreadsheet can be rebuilt in an afternoon from your payment records. A missing IP agreement is different. Paying a contractor is not the same as owning their work, and you only notice the gap when someone asks for the signed document.

Sort every item into three buckets: what you have and can prove, what needs a quick fix, and what still needs to be built. Having your shares recorded in a cap table app or spreadsheet does not mean the records are correct. Check them against what you actually promised people.

Usually not, in our view. Audited accounts are financial statements checked by an outside accountant. A SOC 2 report, short for System and Organization Controls 2, is a formal security audit that larger business customers often ask for.

Preparing these early is not caution. It is time taken from traction, meaning proof that people use or pay for what you built, which is what actually moves a round. Build one only when a specific trigger appears: an investor asks for it in writing, or a customer makes it a condition of buying.

Some investors check much more, even at pre-seed. If you handle health records, money or children's data, the law may require privacy or security steps from day one, whatever an investor asks.

The missing fact that would change your list is what this specific investor checks. Ask them early for their diligence list. If they share it, it replaces guessing.

The DD Prep tool takes your stage and what you already have ready. It returns a checklist ordered by what is most likely to stall a deal, with a status and a reason for each item. It also names what you can skip for now and what would make that item worth doing later. Legal and tax items come with a reminder to have a lawyer review the real document.

It does not tell you whether to raise or whether your round will close. It helps you find the gap now, on your own time, instead of on a call with an investor.

Make one folder. Put in three things: signed IP agreements from everyone who built anything, your current cap table, and a revenue or user export from your payment processor or product. Mark each one have, fix, or build. The first fix or build on that list is the one to close before your next investor call.

If your first investor meeting is still ahead, start with what to send before an investor meeting. If you already have an offer, read what the phrases in a term sheet mean.

What do investors ask for at pre-seed?

Less than founders fear, and more than most have written down: proof the company owns its IP, a cap table that matches reality, and numbers that match your records.

Should I build a data room before I start raising?

A data room is a shared folder of company documents for investors. Build the cheap, important parts first, like IP agreements and clean numbers. Skip expensive extras until someone asks.

What if I find a gap in the middle of a raise?

Name it and fix it quickly. "We found this and here is the fix" sounds in control. Going quiet for a week sounds unprepared.