Angel investing has a 90% failure rate. But the 10% that work return 10x-100x, more than compensating for the losses. The difference between consistently losing and occasionally winning is systematic due diligence — not just gut feel and founder charisma.
This checklist is designed for angels doing their first 10 deals. It optimizes for catching obvious problems early, before you've spent meaningful time or money.
Time investment: 3-5 hours for a thorough first pass. That's it.
Before the First Call (30 minutes)
1. Company Basics
- What does the company actually do? Can you explain it in one sentence?
- Who is the primary customer, and what problem does the product solve for them?
- Is there a working product, or is this an idea-stage company?
- What is the current stage (pre-revenue, revenue, product-market fit, scaling)?
Why it matters: Companies that can't articulate their value proposition in one sentence typically haven't thought deeply enough about product-market fit.
2. Founder Background Verification
- Verify employment history on LinkedIn — do dates and titles match what founder claimed?
- Check education credentials — do degrees and institutions match?
- Look for previous startup experience — founding, early employee, or domain expertise?
- Check for public records (court records, bankruptcy filings, SEC actions)
Where to verify:
- LinkedIn for employment history
- Crunchbase for funding history of previous companies
- Court records search by state (free on unicourt.com trial)
- SEC EDGAR for public company affiliations
3. Company Digital Footprint
- Check website — does it load, is it professional, does the product make sense?
- Check social media presence — is there activity or is it a shell?
- Check Crunchbase — is the funding history consistent with what founder claims?
- Check Glassdoor/Indeed — what do former employees say?
Time estimate: 20-30 minutes for basic signals.
The First Call (45-60 minutes)
Bring this checklist. Don't let the founder control the entire conversation.
4. Problem and Market (10 minutes)
- Q: What specific problem does this solve, and for whom?
- Q: How do customers discover this product today (current alternatives)?
- Q: What does a customer pay for the current workaround, in time or money?
- Q: What is the market size (TAM/SAM/SOM), and how was it calculated?
Green flags: Specific customer names, verifiable workaround costs, SOM derived from bottoms-up analysis. Red flags: Vague customer descriptions, TAM pulled from a generic market report, SOM = TAM.
5. Product and Traction (10 minutes)
- Q: How many customers do you have, and how did you acquire them?
- Q: What is the retention curve (day 1, day 7, day 30)?
- Q: What is the current monthly revenue, and what has the growth trajectory been?
- Q: Can I see a product demo?
Green flags: Specific retention numbers, cohort analysis showing improvement, revenue growing faster than headcount. Red flags: "Users" without revenue where monetization exists, retention curves that decline sharply after day 7.
6. Business Model (10 minutes)
- Q: What is the pricing, and how was it set?
- Q: What are the unit economics — CAC, LTV, payback period?
- Q: What is the current gross margin?
- Q: What is the path to profitability?
Green flags: Unit economics that work at scale, CAC/LTV ratio below 0.3, gross margins above 60% for SaaS. Red flags: Can't articulate unit economics, CAC higher than LTV, gross margins below 40% for SaaS.
7. Competition (5 minutes)
- Q: Who are your top 3 competitors, and what do you do differently?
- Q: What is your competitive advantage, and how defensible is it?
- Q: How quickly can a large company replicate what you've built?
Red flags: "We're the only one doing X" — almost always false. No named competitors.
8. Team (10 minutes)
- Q: Why are you the right team to solve this problem?
- Q: What do you not yet have that you need?
- Q: What are the biggest risks in the business, and what's your plan to address them?
Green flags: Specific, honest risk assessment. Acknowledges gaps in team. Red flags: Deflects risk questions, claims no competitors, "we have no risks."
Reference Checks (1-2 hours)
9. Founder References
Ask for 3 references: 1 customer, 1 former colleague, 1 previous investor.
Customer reference questions:
- How did you find the company?
- What problem does it actually solve for you?
- What would you change?
- Would you recommend them to a friend?
Colleague reference questions:
- How long did you work together, and in what capacity?
- What are their strengths and weaknesses as an operator?
- How do they handle conflict or pressure?
- Would you invest in them again?
10. Investor Reference
- How do they behave in board settings?
- Do they add value or just observe?
- Have they followed through on commitments?
- Would you work with them again?
Legal and Financial Review (2-4 hours)
11. Cap Table
- Request full cap table from Carta or similar
- Check for any undocumented equity obligations (advisory shares, contractor equity)
- Verify option pool size (current and post-money)
- Confirm founder ownership percentages are consistent with stage norms
12. Formation Documents
- Certificate of Incorporation
- Bylaws
- Any shareholder agreements
13. Intellectual Property
- Is all founder IP assigned to the company?
- Are there any open-source components that create obligations?
- Any patents or trademarks filed?
The Decision Framework
Green Light Conditions
- Founder background verified ✓
- Product works and customers use it ✓
- Unit economics at least directionally positive ✓
- Market timing makes sense ✓
- References check out ✓
- Cap table is clean ✓
Yellow Light Conditions (Require More Due Diligence)
- Founder background unverifiable but plausible
- Early traction but unclear retention
- Large market but weak competitive position
- One weak reference
Red Light Conditions (Pass)
- Founder background discrepancy
- No product or product nobody uses
- Unit economics don't work at any scale
- Red flags on references
- Cap table problems (hidden equity, excessive dilution)
What Soloanalyst Adds
Soloanalyst automates the pre-call background check: team history verification, company funding cross-reference, product signal analysis, and competitive landscape mapping. It catches the obvious problems in 5 minutes so you spend your 60-minute call on the nuanced diligence.
Run every deal through Soloanalyst before your first call. It will tell you where to dig deeper.