What does investor due diligence involve?

Due diligence is the investigation an investor performs before wiring money: the team and references, market and competition, product and technology, metrics and their definitions, legal formation, cap table, and material contracts. At seed it may be days of reference calls; growth rounds involve weeks and third-party work.

Founders run their own diligence too — on the fund's actual decision process, reserves for follow-on, and how the partner behaves when companies struggle. References from founders of that investor's non-winners are the most informative calls a founder can make.