What investors actually check in your data room

By the time a term sheet arrives, the investor already believes the story. Diligence isn't where you sell the vision — it's where a different team, often with a checklist and a deadline, tries to find reasons the deal shouldn't close as priced. Deals rarely die on ambition. They die on reconciliations that don't tie, contracts that were never signed, and cap tables that don't match the filings.

The five folders that get the scrutiny

1. Financials that tie to the bank

The first real test: do the management accounts reconcile to bank statements? Investors will sample months and rebuild revenue from collections. If your monthly close has been running properly, this folder builds itself.

2. The cap table and corporate records

The cap table in your deck must match the statutory registers and past filings — every round, every ESOP grant, every transfer, properly papered. Unpapered "promises" of equity to early contributors are one of the most common deal-delayers in early-stage diligence.

3. Tax and compliance history

Expect requests for filing acknowledgements across GST, income tax, TDS, and payroll-linked deposits, plus any notices and their responses. A clean record reads as operational maturity; a pile of late fees reads as risk that gets priced in — or escrowed.

4. Contracts

Customer agreements, vendor agreements, employment contracts with IP assignment, and the office lease. The killer question: does every key employee — including the founders — have a signed agreement assigning IP to the company? For tech businesses this is existential.

5. Unit economics workings

Not the polished slide — the spreadsheet behind it. How is CAC computed, what's in contribution margin, how is churn defined? Investors re-derive these from raw data. If the definitions shift between months, credibility leaks fast.

Sequencing the work

1. 90 days out: reconcile books to bank for the trailing 24 months; clear pending filings; paper any informal equity arrangements.
2. 60 days out: standardise unit-economics definitions and rebuild the model on collections; assemble contracts and chase missing signatures.
3. 30 days out: populate the data room with indexed folders; dry-run the twenty most likely diligence questions with written answers.

Founders who do this don't just survive diligence — they shorten it. Speed is leverage: every week saved in diligence is a week the deal can't go sideways on you.