You've found a startup you like. The pitch deck is compelling, the founder is charismatic, and the market feels ripe. But before you wire funds, you need to do something that separates successful angel investors from those who lose money: due diligence.
Most angels skip it or do it superficially. A Kauffman Foundation study found that angels who perform structured due diligence see significantly higher returns than those who invest based on gut feeling alone.
This checklist covers the 50 questions you should ask across six critical areas. Print it, use it, and don't write the check until you can answer every section.
1. Team & Founders (Questions 1–10)
The team is the single biggest predictor of startup success. Here's what to dig into:
1. Is the founder building something they personally need or deeply understand? (Founder-market fit)
2. What relevant domain experience does the founding team have?
3. How long have the founders worked together? Have they shipped something before?
4. Is the founding team full-time, or are they still employed elsewhere?
5. What's the co-founder dynamic? Who makes final decisions when you disagree?
6. Has the team been transparent about past failures or pivots?
7. Are there gaps in the team (e.g., no technical co-founder for a tech product)?
8. What's the founder's commitment horizon? Are they building for 7–10 years?
9. Does the founder respond quickly and openly to your questions, or do they deflect?
10. Can you talk to 2–3 people who've worked with the founder before?
Red flag: Founders who can't clearly articulate why THEY are the right team to solve this problem, or who dodge questions about commitment and equity splits.
2. Market & Opportunity (Questions 11–18)
11. What's the total addressable market (TAM), and is it growing?
12. What's the realistic serviceable market (SAM) for this product?
13. What's the market timing? Why now specifically?
14. Is this a "vitamin" (nice to have) or "painkiller" (must have)?
15. What regulatory or compliance requirements exist in this market?
16. How does this market behave in a downturn? Is it cyclical?
17. Are there recent exits or IPOs in this space that validate the market?
18. What's the market adoption curve? How fast are customers adopting similar products?
Red flag: "We're targeting a $50B market" without explaining how they reach even 0.1% of it. TAM without SAM and SOM is just a big number.
3. Product & Traction (Questions 19–28)
19. Is the product live? If not, what's the realistic timeline to launch?
20. What evidence of product-market fit exists? (Retention curves, NPS, usage growth)
21. What's the monthly revenue run rate, and how is it trending?
22. What are unit economics? (CAC, LTV, payback period, gross margin)
23. How many active users does the product have? What defines "active"?
24. What's the month-over-month growth rate for both users and revenue?
25. What competitive moats exist? (Network effects, proprietary data, switching costs, patents)
26. What are the top 3 customer complaints or feature requests?
27. Does the product have technical debt that could slow future development?
28. What's the product roadmap for the next 12 months, and is it realistic?
Red flag: "We'll figure out monetization later" or traction metrics that sound impressive but lack context (e.g., "10,000 signups" without mentioning 2% activation).
4. Financials & Business Model (Questions 29–37)
29. What's the current monthly burn rate?
30. How many months of runway does the current raise provide?
31. What are the key assumptions in the financial model? Which are most uncertain?
32. What's the path to profitability? Is there a realistic timeline?
33. How are customer acquisition costs trending? Improving or worsening?
34. What's the gross margin, and is it improving with scale?
35. Are there any outstanding debts, convertible notes, or SAFEs that will convert in this round?
36. What are the top 3 financial risks that could kill the company?
37. Has the company raised before? If so, on what terms?
Red flag: Founders who can't articulate their burn rate or runway. If they don't know their numbers cold, that's a problem.
5. Legal & Cap Table (Questions 38–45)
38. Is the cap table clean? Are there any unusual terms, liquidation preferences, or participating preferred?
39. What's the proposed valuation for this round, and how was it determined?
40. Are there any outstanding lawsuits, regulatory actions, or IP disputes?
41. Does the company own all its IP? Are there any IP assignments missing?
42. What's the vesting schedule for founders? (Standard: 4 years with 1-year cliff)
43. Are there any side letters, advisory shares, or other non-standard arrangements?
44. What investor rights are being offered? (Information rights, pro-rata, board observer)
45. Is the investment structure a SAFE, convertible note, or priced round? What are the specific terms?
Red flag: A cap table with more than 20 shareholders at the pre-seed/seed stage, or founders with less than 60% ownership after dilution.
6. Deal Terms & Alignment (Questions 46–50)
46. What's the valuation cap (if SAFE/note) or pre-money valuation (if priced round)?
47. Is there a discount on conversion? What percentage?
48. Does the deal include pro-rata rights for follow-on investments?
49. What milestones is the company trying to hit with this funding?
50. Does the founder share your vision for the company's long-term potential?
Red flag: Valuations that can't be justified by comparable exits or traction. A $10M pre-money for a pre-revenue company needs extraordinary justification.
How to Use This Checklist
Don't try to answer all 50 questions in a single meeting. Here's a practical workflow:
- Before the first meeting: Research questions 1–5 (team) and 11–15 (market)
- After the pitch: Dig into questions 19–28 (product/traction) and 29–37 (financials)
- Before committing: Get answers to questions 38–50 (legal/terms)
- Reference checks: Talk to 2–3 people who've worked with the founder (question 10)
The goal isn't to find a perfect investment — it's to identify fatal flaws early. Every angel investment carries risk. Due diligence helps you avoid the ones that are unnecessarily risky.
Track Your Due Diligence in AngelHub
This checklist is free. But tracking your findings across 20+ startup evaluations gets chaotic fast — spreadsheets collapse under their own weight when you're managing notes, term sheets, and investment records in parallel.
AngelHub gives you a structured way to:
- Store due diligence notes alongside each investment
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The free tier covers 5 investments with full analytics — more than enough to see if it works for you. Try it free →
This checklist is part of AngelHub's educational series for angel investors. We believe better due diligence leads to better returns — for everyone.