Venture Capital Due Diligence Checklist: A Step-by-Step Guide for 2026

A partner told me about a deal that looked like a slam dunk on the first call: strong founder, crisp narrative, fast growth. Two weeks later, the same partner had to send the hardest email in venture, the one that starts with "After careful review..."

The reason was not a single "gotcha". It was a pile of small misses that added up: unclear revenue quality, a messy cap table, one major customer concentration risk, and an IP assignment gap nobody caught until legal. Each issue was solvable. The problem was the process. The team did diligence in the order they thought of questions, not in the order that de-risks a decision.

This guide gives you a diligence checklist that works for seed through growth. It is designed to be fast, repeatable, and defensible. You can copy it into Notion, a doc, or your CRM and reuse it across every deal.

What VC Due Diligence Is (And What It Is Not)

Due diligence is the structured process of validating what would need to be true for the investment to work, and then stress testing those assumptions.

It is not a scavenger hunt for perfect information. Early stage deals never have that. The goal is to reduce avoidable risk, document the remaining risk, and make sure the deal is still attractive under realistic downside scenarios.

The Checklist (Copy and Reuse)

Use this as your default sequence. If you are short on time, do the first four sections before you invest more cycles. They catch most "no" answers early.

1) Thesis Fit and Why Now

• What is the wedge? What narrow use case wins first, and why does that expand?
• What is the fund fit? Stage, check size, ownership target, reserves, and timeline.
• Why is this the right market timing now?
• What would make this a clear "no" even if the team is great?

2) Team

• Founder-market fit: why this team, specifically, wins this problem.
• Decision making: how do they set priorities and resolve conflict?
• Hiring plan: the next 3 critical hires and why they unlock the next milestone.
• Reference checks: 3 to 5 references that can validate execution and integrity.

3) Market and Customer

• Who is the buyer, user, and economic decision maker?
• What is the painful, frequent problem? What happens if the customer does nothing?
• What is the budget line item (or how will one be created)?
• Market sizing: focus on bottom-up assumptions you can defend, not only top-down TAM.

4) Product and Differentiation

• Can you explain the product in one sentence that a customer would agree with?
• What is the smallest proof of value a customer experiences in the first week?
• What does the roadmap look like for the next 2 quarters?
• Differentiation: what is hard to copy? Data, workflow lock-in, distribution, brand, or switching costs?

5) Traction and Go-to-Market

• Pipeline: sources of leads, conversion rates, and sales cycle by segment.
• Retention: logo retention and revenue retention (if applicable).
• Concentration: top customers as a percentage of revenue and pipeline.
• Pricing: what drives willingness to pay and what triggers churn?

6) Financial Quality (Not Just Growth)

• Revenue quality: contracts, renewals, refunds, and any one-time services.
• Unit economics: CAC, payback, gross margin, contribution margin, and LTV drivers.
• Burn and runway: current burn, planned burn, and what the next raise depends on.
• Budget realism: headcount plan and what breaks if hiring slips by 90 days.

7) Legal and Corporate Hygiene

• Formation docs, stock issuance, option grants, and a clean cap table.
• IP assignments from founders, employees, and contractors.
• Material contracts: customer, vendor, channel, and any exclusivity.
• Regulatory exposure: privacy, security, and industry compliance obligations.

8) Technical Diligence (Even If You Are Not an Engineer)

• Architecture: where does the system break as usage scales 10x?
• Security posture: access controls, secrets management, and incident response basics.
• Data: what is stored, how it is protected, and how it is deleted.
• Operational maturity: monitoring, backups, and deployment practices.

9) Risks and Mitigations

• Top 5 risks: list them explicitly, with leading indicators and mitigation plans.
• Downside case: what happens if growth slows by 50% for 2 quarters?
• Competitive risk: what if a large incumbent ships a copycat feature?

10) The Deal and the Decision

• Ownership math: what does this round imply for future dilution and reserves?
• Governance: board, protective provisions, and information rights.
• Alignment: what has to be true for founders and investors to win together?
• IC memo: make the decision explicit, and document the key assumptions.

How To Use This Checklist Without Slowing Down

The fastest diligence process is the one that does not redo work. Three rules help:

• Front-load disconfirming tests. Ask questions that can kill the deal early before you schedule deep dives.
• Standardize the artifacts. Use the same memo format, the same request list, and the same scorecard across every deal.
• Separate facts from narrative. Write down what you saw and heard, then write what it means. Do not blend them.

Common Diligence Mistakes (And The Fix)

• Only validating the story. Fix: assign someone to actively look for disconfirming evidence.
• Over-indexing on a single metric. Fix: use a small set of leading indicators (retention, conversion, margin, and sales efficiency).
• Skipping hygiene. Fix: legal and cap table issues are cheap to fix early and expensive later.

Next Steps

If you want to operationalize this checklist, start by turning it into a reusable template and linking each section to the evidence you collected (docs, calls, customer notes, and analysis). That is what makes diligence defensible.