Due Diligence Checklist for Angel Investors
Angel investment due diligence is the structured verification of startup claims across seven dimensions: company basics, market timing, product traction, team quality, commercial viability, risk indicators, and investment terms. The speed-quality tradeoff exists because angels typically evaluate 20-50+ deals per year — the goal is allocating deep-diligence time to deals that pass initial screening. Industry data suggests angels who complete structured first-pass diligence on all inbound deals close 27% more deals without increasing time spent (PitchBook 2025 Angel Investor Survey).
Use this checklist to move from first inbound to clear conviction.
1. Company Basics
- Legal entity, headquarters, and operating geography
- Product category and target buyer
- Current stage (pre-seed, seed, Series A)
Questions to ask: What state is the company incorporated in and why? Where are the key employees actually located? Does the "SF-based" claim match reality?
2. Market and Timing
- Clear wedge market where the startup can win now
- Tailwinds (regulation, platform shifts, buyer behavior)
- Credible path from niche beachhead to broader expansion
Questions to ask: What specific market is the company targeting? What would need to be true for this to be a $100M market? Why now — what changed in the last 2 years that made this viable?
3. Product and Adoption
- Product demo quality and onboarding clarity
- Early customer references with concrete outcomes
- Usage evidence: activation, retention, and expansion
4. Team
- Founder-market fit and domain depth
- Hiring quality in core functions (engineering, sales, operations)
- Ability to recruit senior talent before scale bottlenecks hit
5. Commercials
- Revenue composition and margin profile
- Sales cycle length and win rate by segment
- Burn multiple and expected runway under conservative assumptions
6. Risk Flags
- Overstated TAM with weak bottom-up evidence
- Heavy dependence on one customer, channel, or founder
- Claims that fail external verification
- Narrative drift between deck, website, and hiring profile
7. Investment Readiness
- Round terms and expected ownership
- Follow-on capital requirements
- Plausible outcomes: durable independent business vs acquisition path
Diligence Timeline by Pass
| Pass | Time | Focus | Output |
|---|---|---|---|
| First pass | 45 min | All 7 categories surface-level | 2-3 areas needing deep-dive |
| Second pass | 2-4 hrs | Flagged areas only | Data calls, reference checks |
| Decision | 30 min | Synthesize findings | Pass, conditional pass, or pass and lead |
Fast scoring template
Score each category from 1 to 5:
- Market conviction
- Product traction
- Team quality
- Financial discipline
- Risk-adjusted upside
If any category scores 1, pause and investigate before moving forward.
A high-quality no is as valuable as a high-quality yes.