Due diligence is the verification phase of an investment: the period, mostly between term sheet and closing, when the investor tests what the pitch asserted; serious deeptech leads front-load the technical workstream before they price. The standard workstreams are corporate and legal (incorporation, contracts, litigation, IP ownership), financial (accounts, runway model, cap table), commercial (market, customers or letters of intent), team (references, background) and, in deeptech, technical diligence with domain experts.
Two findings categories matter differently. Confirmatory findings adjust detail: a contract to amend, a number to restate. Red flags reprice or kill: IP not actually assigned to the company, an undisclosed liability, a claimed result that does not replicate, a cap table that does not reconcile. Most diligence failures trace to surprises, not to weaknesses; a weakness disclosed early with a plan reads as maturity, the same weakness discovered in week 5 reads as concealment.
Diligence runs in both directions. The founder is entitled to references on the fund: how it behaved in its last down round, whether reserves exist for follow-on, what its board members are like under stress. The investor who resents reverse diligence is answering it.