This article is for Irish startup founders who are planning to raise investment and need to prepare for investor due diligence.
If you're wondering what documents investors expect to see, how to organize them, or what problems could kill your deal, this guide covers the complete preparation timeline, essential document checklist, and common red flags that make investors walk away.
Key Takeaways
• Start due diligence preparation two to three months before approaching investors to avoid rushed, stressful problem-solving.
• Missing IP assignment agreements from founders, employees, or contractors represents a deal-breaking problem for most investors.
• Unclear cap table ownership structures or missing shareholder agreements will immediately end investor discussions.
• Investors expect monthly management accounts showing revenue trends, cash burn rate, and actual performance against forecasts.
• File all overdue annual returns and clear outstanding tax liabilities before any investor discussions begin.
Laura Ryan is a practising Barrister at the Bar of Ireland. She graduated from the Honourable Society of King’s Inns in 2024, having previously qualified and practised as a Chartered Accountant in a big four accounting firm.
How far in advance should I start preparing for investor due diligence?
You should begin preparation two to three months before approaching investors seriously. This timeline gives you enough time to identify problems, fix issues, and gather missing documents without the stress of last-minute preparation, which makes problems harder to resolve properly.
What happens if I'm missing essential documents when investors start due diligence?
Missing essential documents signals poor management to investors and creates doubt about other aspects of your business. Investors expect organised access to all corporate, financial, and legal documents, so gaps in your documentation can seriously damage their confidence in your company.
How should I organize my data room for investor review?
Create clear folder structures with descriptive names that investors can navigate easily, separating documents by category (incorporation, financial, legal, compliance, and commercial). For example, keep legal contracts and IP documentation together but separate from accounts, tax returns, and forecasts—this shows professionalism and respects investor time.
What cap table problems will cause investors to walk away from a deal?
Unclear ownership structures are the fastest way to end investor discussions. Investors won't proceed if they can't determine who owns what and who can approve transactions, including issues like missing shareholder agreements, unclear vesting schedules, lost shareholders with uncancelled shares, or unrecorded verbal promises.
Do I need IP assignment agreements from everyone who's worked on my product?
Yes, you need IP assignments from all founders, employees, and contractors who contributed to your product or technology. Missing assignments from contractors or early employees represent deal-breaking problems for most investors, as they won't fund companies that might not own their core technology.
What financial records do investors scrutinize most carefully during due diligence?
Investors focus on revenue trends, cash burn rate, and financial controls, expecting monthly management accounts showing actual performance against forecasts. They pay particular attention to revenue recognition practices, current cash position and runway, monthly burn rate trends, customer concentration risk, and deferred revenue obligations.
Can I fix compliance problems after investors have started their due diligence?
Minor issues can be addressed through purchase agreement warranties and indemnities, while significant problems might reduce your valuation or require resolution before closing. However, deal-breaking issues like unclear IP ownership, hidden litigation, or false representations may cause investors to walk away entirely.
What documents are considered red flags that seriously concern investors?
Settlement agreements with former employees, onerous debt finance terms with personal guarantees, related party transactions, threatening legal correspondence, and regulatory notices all raise serious concerns. These documents suggest disputes, financial stress, conflicts of interest, or compliance failures that investors take very seriously.
How do I clean up cap table issues before approaching investors?
Start by documenting the current reality—list all shareholders with share numbers and classes, then identify problems like missing agreements or disputed ownership. Get signatures on missing shareholder agreements or waivers, and seek legal advice when dealing with missing shareholders or disputed ownership, as these situations require professional handling.
What compliance issues should I fix immediately before investor discussions?
File all overdue annual returns immediately to prevent strike-off risk, clear all outstanding Revenue liabilities, update your Register of Beneficial Ownership, and obtain professional indemnity and public liability insurance coverage. Late or missing annual returns and outstanding tax liabilities signal deeper organizational problems or cash flow issues to investors.
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