The Pre-Seed Due Diligence Checklist for Business Angels

You've watched the pitch, you're intrigued by the founder, and you see the potential in the idea. Now it's time to move beyond the pitch and into the due diligence process. For a business angel investing at the pre-seed stage, due diligence is different from that of a later-stage VC. You can't analyze years of financial statements or detailed churn cohorts because they simply don't exist yet. Instead, your diligence process is more qualitative, focusing on the team, the market, and the product's foundational assumptions.

This checklist provides a structured approach to pre-seed due diligence, helping you ask the right questions to de-risk your investment and increase your confidence.

The Founder Diligence

At this stage, you are primarily investing in the founder. This is the most important area of your diligence.

• Founder-Market Fit:  Have a deep conversation about their personal connection to the problem. Why are they the perfect person to solve this? What unique insight do they have?
• Resilience & Coachability:  Ask about a time they failed. How did they handle it? What did they learn? Present them with a hypothetical challenge and see how they reason through it.
• Full-Time Commitment:  Is the founder working on this full-time? A side project is much less likely to succeed.
• Reference Checks:  If possible, talk to people who have worked with the founder before. Ask about their work ethic, their communication skills, and their ability to lead.

The Problem & Market Diligence

You need to develop your own conviction about the problem and the market size.

• Problem Validation:  Ask the founder to walk you through their validation process. Who did they talk to? What did they learn? Are there quotes or survey data?
• Market Sizing:  How did they arrive at their market size (TAM/SAM/SOM) calculation? Does it seem realistic? Do your own quick "napkin math" to verify.
• Competitive Landscape:  Who are the main competitors, both direct and indirect? Why will this solution win? A good answer focuses on a unique insight or an underserved niche.

The Product & Technical Diligence

Even if the product is just an MVP, you need to assess its potential.

• Product Demo:  Get a live, in-depth demo of the product. Ask to see the messy parts, not just the polished pitch version.
• Technical Feasibility:  If it's a technical product, do the founders have the skills to build it? If not, do they have a credible plan to hire the right talent?
• Product Roadmap:  What is the vision for the next 6-12 months? It doesn't need to be set in stone, but the founder should have a clear idea of where the product is headed.

The Deal Diligence

Finally, you need to look at the specifics of the investment itself.

•  Valuation:  Is the valuation reasonable for a pre-seed company in this sector? Does it leave room for future fundraising rounds?
• The "Ask":  How much are they raising, and what will they use the money for? Look for a clear, milestone-based budget (e.g., "This will give us 18 months of runway to hire two engineers and reach 100 paying customers").
• Cap Table:  Who else is on the capitalization table? Are there any red flags, like large amounts of "dead equity"?

This structured checklist helps you move from an initial emotional reaction to a reasoned, analytical investment decision, which is the core of our evaluation philosophy.

• Return to the main framework: The Art of Analysis: A Framework for Evaluating Early-Stage Tech Ventures

Invest with Confidence

Pre-seed investing will always involve a leap of faith. There are no guarantees. But by following a structured due diligence process, you can ensure you're taking a calculated risk, not a blind one. You can invest with the confidence that you've asked the right questions and truly understand the opportunity in front of you.