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Hey there,
Welcome to where I write about my journey from a stable Big Tech Software Engineering job to the wild and volatile world of Venture Capital.
What Actually Goes Into Due Diligence at Pre‑Seed/Seed
Pre‑seed and seed diligence isn’t forensic accounting; it’s risk triage under time pressure. The job is to answer one question: Is this the team, in this market, with this wedge, that can compound? Here’s how to break it down.
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1) Team & Founder‑Market Fit
Why you? Why now? Show the earned secret: an insight from prior work, research, or pain you’ve lived.
Evidence of velocity: shipping cadence, commits, prototypes, customer interviews. A weekly changelog beats a glossy deck.
Co‑founder dynamics: roles, decision process, equity split, vesting, and how you resolve disputes.
2) Problem, Market, and Wedge
Clarity of the problem: who screams if it disappears?
Market map: current spend, incumbent workflows, and the initial beachhead (ICP), plus a believable path to adjacent markets.
Wedge mechanics: why your entry point is painful enough to pull adoption and defensible enough to expand.
3) Product & Technology
Demo that shows the core loop in under five minutes.
Architecture overview: what you’ve built vs. borrowed, key dependencies, scalability, and any regulatory constraints.
Moats‑in‑progress: proprietary data, distribution loops, or workflow lock‑in. “We use LLMs” is not a moat; unique data or UX loops might be.
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4) Traction & Early Signals
Evidence > anecdotes: activated users, retention curves, time‑to‑value, and expansion behavior from design partners.
Pipeline quality: number of leads by ICP, stage definitions, and win/loss reasons. Letter‑of‑intent ≠ revenue, but it’s a signal if tied to timeline and price.
5) Go‑To‑Market
How the product finds users (and vice versa): founder‑led sales, PLG loops, or partner channels.
Pricing hypothesis with at least one real willingness‑to‑pay datapoint. Show three conversations that changed your price.
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6) Financials & Cap Table
Runway math, burn, hiring plan for the next 18 months, and what “default alive” looks like.
Clean cap table: standard SAFEs, reasonable valuation caps, no toxic side letters, IP assigned to the company.
7) References & Backchannel
Customer, former manager, and peer references focused on grit, learning speed, and follow‑through.
If you say “we’ll ship X by Friday,” did you?
Data Room (lightweight ≈ 10 artifacts)
One‑page overview
10–12 slide deck + 5‑min demo video
Product spec & roadmap (quarter‑level)
Architecture diagram
Metrics snapshot (activation, retention, top‑of‑funnel)
Pipeline and design‑partner list
GTM brief (ICP, messaging, pricing)
Basic financial model and hiring plan
Cap table & key agreements (IP, SAFEs)
Security & compliance posture (if relevant)
🚩 Red Flags
Unclear owner for critical functions, hero‑dependent execution, cap table hair, or a story that changes every meeting.
🟢 Green Flags
Tight problem narrative, observable velocity, honest metrics, and founders who run experiments without being asked.
Diligence at this stage is less about perfection and more about momentum, learning speed, and the trust that you’ll do what you said - then do a little more.
Until next time!
Signing off and signing zero checks,
SWEdonym
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