Angel Investing? Here’s the Due Diligence Checklist You Can’t Ignore

Angel investing is exciting. You're not just backing a company, you're backing a vision. But with big dreams come real risks. Great ideas often fail—not because of lack of passion, but due to gaps in validation, planning, or execution.

If you're stepping into the world of early-stage investing, here’s a simple and effective due diligence checklist to guide your decision-making:

1. Team Assessment: The founding team is everything. Look beyond resumes. Do they complement each other’s strengths? Have they worked together before? Are they coachable, resilient, and obsessed with solving the problem? A-grade teams can pivot through B-grade ideas, but not the other way around.

2. Market Size Validation: Is the problem big enough? Many pitches overestimate market potential. Do your own research. Understand if it’s a growing, underserved, or saturated market. The best bets lie in solving real pain points at scale.

3. Business Model Viability: How will they make money—and is it sustainable? Look at unit economics, pricing strategy, and potential for repeat revenue. A good product with a weak business model rarely survives the long game.

4. Competitive Analysis: Who else is solving this? What makes this solution 10x better or different? Understand the competitive landscape, barriers to entry, and how this startup plans to stay relevant over time.

5. Financial Projections: Early-stage numbers are educated guesses, but they reveal thinking. Are the assumptions grounded in logic? Look at burn rate, runway, and fundraising plans. Conservative, transparent projections are often more reliable than overhyped growth curves.

6. Legal Structure: Check incorporation details, cap table, ESOPs, and IP ownership. Are agreements in place among founders? Legal clarity now prevents future friction.

7. Exit Potential: What’s the long-term play? IPOs are rare, so understand acquisition pathways or strategic fits. Great founders usually have a vision for both building and exiting.

In angel investing, instinct plays a role—but insight builds returns. Use this checklist as a compass, not a crutch. Back founders who inspire trust, not just ideas that sound shiny.