Angel-stage due diligence covers the same core questions institutional diligence does — team, market, financials, ownership — but without a fund's associate pool, legal team, or standardized checklist to run it. What distinguishes a disciplined angel from a casual one isn't the depth of any single check; it's having a consistent process they run on every deal, so a decision to invest (or pass) is grounded in the same questions each time rather than however much time happened to be available before the round closed.
What should angel investors check before signing a term sheet?
Four things, roughly in this order: who's on the team and can they actually execute; is there real evidence of market demand, not just a plausible story about one; what does the cap table look like today, including anyone who might have a claim you don't know about; and what are the actual terms being proposed, in writing, not as described verbally on a call. A term sheet should never be signed based only on a conversation — get it in writing, read every clause, and if a clause is unfamiliar, ask what it does before signing, not after.
The single most common angel mistake is skipping the cap table review because the round feels informal. A founder's account of "you'll own X%" is not the same as seeing the actual ownership structure, including any existing SAFEs, option pool size, or advisor grants that dilute the round you're evaluating.
How do you evaluate a founding team in due diligence?
Direct reference checks matter more than anything in the deck. Talk to former colleagues, not just people the founder suggests — ask specifically who else has worked closely with them, and reach out independently. Ask about how the founder handles disagreement and setbacks, not just their technical competence; early-stage companies fail more often from founder conflict or an inability to adapt than from a bad initial idea.
Look for evidence of prior execution, even in a different context — a founder who shipped something real before, even something small, is a different bet than a founder with only a plan. And be honest with yourself about domain fit: a founder building in a regulated industry with zero relevant experience is a real risk factor, not something a strong pitch deck offsets.
What financial documents should you request at seed stage?
At minimum: current cash balance, monthly burn rate, and runway to the next milestone or fundraise. A basic revenue model if there's any revenue at all, even pre-revenue projections with stated assumptions. Any existing SAFE or note terms already issued — you need to know what you're converting alongside, not just your own terms.
Don't expect audited financials or a full accounting system at seed stage — that expectation is a Series A standard applied too early, and asking for it signals unfamiliarity with the stage more than diligence rigor. What you should expect is honesty about what exists: a founder who says "we don't have formal financials yet, here's what we track in a spreadsheet" is more trustworthy than one who produces polished-looking numbers with no underlying process behind them.
What is a cap table and why does it matter before you invest?
A cap table is the record of who owns what percentage of the company's equity — founders, employees via an option pool, and every investor across every round to date. It matters before you invest because it tells you two things a pitch never will: how much dilution has already happened, and whether the ownership structure has any red flags — an unusually large option pool set aside right before your round, a co-founder who's since left with equity still on the table, or existing investor terms (like an aggressive valuation cap on a prior SAFE) that will affect what you actually end up owning once everything converts.
Ask to see the cap table directly, not a founder's verbal summary of it. If a founder is reluctant to share it before a term sheet is signed, that reluctance is itself informative.
How do you structure your decision and record it?
The best-run angel process treats every deal the same way: a fixed set of questions asked every time, a written record of what was reviewed and when, and a clear decision — invest, pass, or hold for more information — made deliberately rather than by default because a deadline arrived. Keeping that record matters for reasons beyond any one deal: it's how you improve your own process over time, and it's the evidence you'd want if a decision were ever questioned later, by a co-investor or at the next round.
Structuring diligence this way is also what makes it repeatable at scale, once you're running more than one or two deals a year — the process stops depending on memory and starts depending on a consistent record. On Lengdon, an angel's diligence checklist, the documents reviewed, and the final decision to proceed all attach to the same deal room, from NDA through Terms and Conditions to Close, so the record of what was reviewed and when isn't reconstructed later from an email thread — it's built as a byproduct of running the deal itself.
FAQ
What documents should an angel investor request?
Current cash position, burn rate, runway, existing revenue (or projections with stated assumptions), and the current cap table including any prior SAFE or note terms already issued. A term sheet in writing before any verbal agreement is treated as final.
How long does angel due diligence take?
There's no fixed standard, but a disciplined process typically runs one to three weeks for a straightforward seed deal — enough time for reference checks and a real cap table review, without dragging past the point where the round's other investors have already decided. Diligence that takes materially longer usually signals either genuine concerns or an undisciplined process, and it's worth being honest with yourself about which.
What are the biggest red flags in angel due diligence?
A founder who won't share the cap table before a term sheet, financial numbers that look too polished with no underlying process behind them, references the founder hand-picked with no way to reach anyone independently, and terms described verbally that differ from what shows up in writing. Any one of these alone might have an innocent explanation; more than one together is a reason to slow down.