Every founder assumes diligence is about the numbers. It rarely is. The numbers

usually check out, or they do not and the deal ends before it starts. What determines

whether a diligence process is smooth or painful is a handful of recurring, fixable issues

that founders do not know to prepare for – not because they are hiding anything, but

because nobody told them these specific patterns get flagged.

Due diligence itself is the thorough evaluation process investors use to assess a

potential investment before committing capital. It spans financial due diligence

(statements, assets, liabilities, cash flow, tax compliance), legal due diligence

(contracts, litigation, regulatory compliance, IP rights), technical diligence (technology,

infrastructure, and team capability), market due diligence (size, growth, competitive

landscape), product and business-model diligence, and an evaluation of the founding

team itself.

In our own diligence work across gaming and interactive media deals, six situations

recur often enough that we have built a standing playbook around them.

• Revenue concentration. Impressive top-line growth can mask a heavy reliance on one-time contracts with no guaranteed repeat business. Separate recurring from one-time revenue in your own model before we ask you to.
• Founder-director loans. Where a director has funded the company through a personal loan, the Companies Act, 2013 permits this, but the director cannot fund that loan by borrowing from others – and must be able to provide a declaration confirming as much.
• Open-source IP exposure. Where core technology depends on open-source components, be ready to demonstrate license compliance and, where public code has been modified, proper attribution.
• ESOP-cap table mismatches. If ESOPs are discussed with investors but do not appear in the cap table, that is one of the fastest ways to erode trust mid-process. Keep an accurate stock ledger aligned to the cap table, with signed option agreements and MCA filings in place before it is asked for.
• Unsigned IP assignments. Contracts with consultants and contractors should explicitly transfer IP in the codebase, designs, and other product components – diligence will ask for this proof.
• Rising debtor balances. A growing balance sheet with piled-up receivables can flag billing errors, disputes, or even fictitious sales. Review overdue accounts by ageing bracket and demonstrate robust invoicing controls before we must ask why the number looks the way it does.

THE VENTANA VIEW

None of these six are deal-killers on their own. What kills a deal is a founder who is surprised by the question – because that surprise is itself the signal we are reading.