Q: What is "diligence" in a Series A?
A: Diligence is when investors review your legal setup to make sure you're a good candidate for investment.
The Three Things Series A VCs Check First in Legal Diligence
Cap Table • IP Ownership • Revenue Proof
Jessica here from Story LLP making sure you know the key things any Series A investor will expect to see when doing diligence — that is, reviewing your legal setup to make sure you're a good candidate for investment.
Why These Three?
Investors check these three things first because they answer two questions:
How much of the company will their investment buy?
How risky is the investment?
Clear answers can speed diligence from months to days and keep legal fees low. Problems tend to do the opposite: increase legal fees and lower the valuation, which means founders give up more of the company for the same investment.
What VCs Ask for First
Cap Table
Who owns what
IP Ownership
Company owns the code / trademarks / proprietary stuff
Revenue Proof
Signed deals = real dollars
1) Cap Table
Definition: Cap Table
Your cap table is a spreadsheet that lists any equity interests — mostly:
every share
every option
every SAFE you've issued
plus who owns them
Why investors care
Investors want to see:
how much of the company is already spoken for
whether any promised stock or options are missing paperwork
2) Intellectual Property Ownership
What investors are checking
Investors want to ensure you really own your company's proprietary stuff — from trademarks to codebases.
They look for signed invention-assignment and license agreements showing the company — not individual founders or employees — owns:
the code
the data
any registered IP (like trademarks)
3) Backup for Your Revenue Numbers
What 'revenue proof' means (plain English)
They're validating that the ARR you quoted is:
real
recurring
collectible
What VCs will ask for
B2C Companies
This may just mean user metrics.
B2B Companies
Especially with higher price points, you'll be asked to deliver signed customer contracts reflecting deals, usually valued over about $25,000 per year.
The Point of All Three
These three checks are fast because they answer:
Ownership Math
How much of the company will the investment buy?
Risk Assessment
What could blow up later?
Clear docs → faster deal, lower fees.
Messy docs → slower deal, higher fees, lower valuation.
Action Step
Do this now, not "after fundraising starts"
Start a simple data room now with three folders:
1) Cap Table
2) IP
3) Revenue
Structured Summary
Topic
Series A diligence: the first three items most VCs ask for.
The three items
Cap Table: a spreadsheet listing shares, options, SAFEs, and owners.
IP Ownership: signed invention-assignment and license agreements showing the company owns code/data/registered IP (e.g., trademarks).
Revenue Proof: backup supporting ARR; for B2B, signed customer contracts (often deals over about $25,000/year); for B2C, user metrics may suffice.
Why VCs start here
These documents answer:
how much of the company is already allocated
how risky the investment is
Consequence
Clear docs can speed diligence and reduce legal fees; problems can increase fees and lower valuation.
Frequently Asked Questions
Q: What are the first three things Series A investors usually ask for?
A: Cap Table, IP Ownership documentation, and Revenue Proof.
Q: What is a cap table?
A: A cap table is a spreadsheet listing equity interests: shares, options, SAFEs, and who owns them.
Q: Why do investors care about the cap table?
A: They want to see how much of the company is already spoken for and whether any promised stock or options are missing paperwork. Gaps or math errors slow deals and cut valuations.
Q: What do investors mean by "IP ownership"?
A: They want evidence the company—not individual founders or employees—owns the proprietary stuff, including code, data, and registered IP like trademarks.
Q: What documents support IP ownership?
A: Signed invention-assignment and license agreements showing the company owns the code, data, and registered IP like trademarks.
Q: What counts as "revenue proof"?
A: Backup for the revenue numbers you quoted—validation that ARR is real, recurring, and collectible.
Q: What revenue proof do B2B startups get asked for?
A: Signed customer contracts reflecting deals, usually valued over about $25,000 per year.
Q: What revenue proof do B2C startups get asked for?
A: This may just mean user metrics.
Q: Why do clean documents matter for founders?
A: Clear answers can speed diligence from months to days and keep legal fees low; problems tend to increase legal fees and lower valuation.
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