Every serious financing round includes legal due diligence. Before money moves, the investors' lawyers will read your corporate records, your cap table, your key contracts and your IP chain of title — and they will write down everything that does not add up.

The question is not whether they will find issues. Almost every young company has some. The question is whether you find them first, while they are still cheap to fix.

What investor counsel is actually checking

Due diligence is not a fishing expedition. Investor counsel is verifying a short list of claims the company implicitly makes: that the shares shown on the cap table were validly issued and are owned by the people listed; that past decisions of the board and the general meeting were properly taken and documented; that the contracts the business depends on are signed and assignable; and that the intellectual property the company sells actually belongs to the company.

Each of these claims rests on documents. Where a document is missing, unsigned or inconsistent with another one, the claim is open — and open claims become findings.

The findings that come up again and again

The same issues appear in most first institutional rounds:

  • Missing or unsigned resolutions. Share issuances, option grants, major contracts or related-party transactions that clearly happened, but for which no board or general-meeting resolution exists — or only an unsigned draft.
  • Inconsistent cap-table records. The founders' spreadsheet, the share register and the commercial register tell three slightly different stories. Often the differences are historical and explainable, but nobody has reconciled them.
  • Unsigned IP assignments. Code, designs or inventions created by founders before incorporation, or by freelancers without a written assignment. The company uses the IP daily; on paper, it may not own it.
  • Informal equity promises. Options or share promises made in emails or conversations, never formalized in a plan or agreement. These surface reliably, because the beneficiaries remember them.
  • Old convertible instruments with unclear terms. Early loans from friends and angels whose conversion mechanics were never fully drafted, leaving the next round to resolve them.

None of these is exotic, and most are repairable. What changes is the cost of repair depending on when they are found.

Why surprises mid-deal cost more than the fix

Found before the round, a missing resolution is usually a drafting exercise: the competent body confirms and ratifies the decision, the record is completed, and the matter is closed. Found by investor counsel mid-deal, the same gap becomes a negotiation item. It shows up as a condition precedent, a specific indemnity, an extended warranty catalogue — or simply as lost trust and lost time while signing waits.

There is also a leverage problem. Fixing an unsigned IP assignment often requires the signature of a former founder or freelancer. Approached calmly, months before a round, most people sign. Approached urgently, days before a closing they know about, some discover a price for their signature. It depends on the person — which is exactly why you do not want to depend on them under deadline.

A structured issue list beats a scramble

Due-diligence readiness is not about producing a perfect company. It is about knowing your own file better than the other side does. In practice that means a focused internal review some months before you expect to raise, producing three things:

  • an issue list — every gap, ranked by severity and by who needs to act to close it;
  • a repair plan — which items are unilateral drafting, which need counterparties, which can only be disclosed and explained;
  • an organized data room — so that when diligence starts, documents arrive complete and consistent, and the process reads as competence rather than chaos.

This is structured reading and reconciliation work at its core — the kind of task where software can compare registers, resolutions and agreements systematically, with a lawyer deciding what each discrepancy means and how to cure it. Whether a given gap is a footnote or a deal issue depends on the facts; the point of the review is to know which, before someone else decides for you.

When to start

Earlier than feels necessary. Repairs that need third-party signatures take weeks; reconstructing years of records takes longer. A company that starts its clean-up when the term sheet arrives will spend the round negotiating around its own history. A company that starts a few months earlier walks into diligence with a short, honest disclosure list and no surprises.

If a round is on your horizon and you are not certain what investor counsel would find, we are happy to look at your file with you — before anyone else does.