Founders
Investors
Aug 15, 2025
What is a Due Diligence Questionnaire (DDQ)?
A Due Diligence Questionnaire (DDQ) in 2025 is a structured document used to gather essential information about a company. It contains standardized questions covering legal, financial, operational, and compliance topics.
Think of it as a pre-flight checklist, if you’re a founder, this document helps prove that your company is investment-ready. If you're an investor, it ensures you’re not flying blind.
What Does a DDQ Typically Include?
1. Corporate Information
Company legal name, registration details, corporate structure
Cap table and shareholder breakdown
2. Financial Information
Past and projected P&L statements
Balance sheets
Cash flow analysis
Revenue breakdown (by product, region, or customer)
3. Legal & Compliance
IP ownership and patents
Pending or past litigations
Contracts and liabilities
Licenses and regulatory documents
4. Product & Technology
Tech stack overview
Security and data protection practices
Product roadmap
Infrastructure and hosting providers
5. Team & HR
Org chart
Key team bios and responsibilities
Employment agreements
Stock option plans and ESOP documentation
6. Customer & Market
Customer list (or anonymized)
Key metrics: CAC, LTV, churn
Competitive landscape
7. Operations
Key business processes
Vendors and partners
KPI dashboards
Benefits of Using a DDQ
For Founders: Speeds up the fundraising process by building investor confidence.
For Investors: Helps identify risks, red flags, and compliance gaps.
For Teams: Creates internal clarity on documentation and structure.
DDQ Alternatives or Complements
Data Rooms: A secure space to host DDQs and related documents. (Use Plox for secure, trackable virtual data rooms.)
Investor Briefs: Short summaries used in early conversations.
Pitch Decks: High-level overview but not a substitute for a DDQ.
What is Due Diligence?
Due diligence is the investigative process investors, acquirers, or stakeholders follow to evaluate a company’s financials, legal standing, operations, and other critical aspects before making decisions like investments, mergers, or acquisitions.
In simpler terms, it’s the homework done before saying “yes” to a business deal. For startups, due diligence often kicks in during fundraising rounds when investors want to validate everything from your cap table to your product-market fit.
What is the Due Diligence Questionnaire used for?
Fundraising & investor reviews: Validate claims in pitch materials (financials, cap table, traction, security posture) during seed–growth rounds and LP/GP assessments.
Mergers & acquisitions (M&A): Surface liabilities and integration risks (contracts, IP ownership, tech debt, compliance) before pricing and closing.
Enterprise procurement & vendor risk: Assess third-party security, privacy, resilience, and regulatory compliance before granting access to data or systems.
Regulatory & compliance checks: Document controls for SOC 2/ISO/GDPR/CCPA, sector rules (e.g., HIPAA/PCI), and ESG disclosures.
Commercial diligence: Examine market position, pricing, cohorts (CAC/LTV/NRR), churn drivers, and pipeline quality.
Ongoing monitoring: Run annual/periodic re-certifications of vendors, portfolio companies, or internal business units as operations evolve.
Data room readiness: Map questions to evidence, organize files, and maintain a single source of truth so reviewers find what they need fast.
Due diligence questionnaire examples
ESG due diligence questionnaire: Focuses on environmental, social, and governance risks: where the company operates, applicable regulations, and adherence to ESG best practices. (For reference, Invest Europe publishes a thorough sample.)
ILPA due diligence questionnaire: The Institutional Limited Partners Association offers a comprehensive, standardized questionnaire that private-equity investors can use to evaluate potential investments in a consistent way.
AFME due diligence questionnaire: The Association for Financial Markets in Europe provides a rigorous framework suitable for regulated firms—especially those handling client assets and navigating capital-markets requirements.
ABAC (anti-bribery and anti-corruption) questionnaire: Designed to assess controls that prevent bribery and corrupt practices across the business and its third parties. Mastercard’s ABAC DDQ is a well-known example of how to operationalize these checks.
Business partner / vendor DDQ: A lightweight, often one-page screen for onboarding partners or suppliers. The Association of Corporate Counsel has a concise template covering the essentials.
FCPA due diligence questionnaire: Centers on the U.S. Foreign Corrupt Practices Act, asking about anti-bribery controls and books-and-records/internal accounting controls, plus third-party compliance.
Enhanced due diligence (EDD): Goes beyond standard reviews with deeper identity and risk verification: UBO analysis, sanctions/PEP screening, adverse-media checks, and corroborating documentation where risks are higher.
Who Uses a DDQ?
Startup Founders preparing for investment
Venture Capitalists and Angel Investors
Private Equity Firms
Corporate Development Teams
LPs evaluating fund managers
What are good due diligence questions?
1) Corporate / Company Info
Who holds ownership of the company?
How is the organization structured (entities, subsidiaries, ownership)?
Who are the current shareholders?
What % equity does each shareholder own?
Do you have the articles of incorporation?
Where is the certificate of good standing from the state of registration?
What are the company bylaws?
Where can we find the latest annual reports and board meeting minutes?
Who is on the senior leadership team (title, salary, tenure)?
What employee benefits are offered?
Are employees represented by a union?
If yes, what does the union contract stipulate?
2) Finances
Where are the company’s quarterly and annual financials for recent years (incl. balance sheet, AR/AP, income statement)?
Where are the federal, state, local, and foreign tax returns for recent years?
How frequently are financials and tax returns audited?
What are the itemized operating expenses?
What is the gross profit margin, and how is it trending?
What is the current debt load?
What capital expenditures are planned in the near term?
What financial models and forward forecasts are in use?
Does the business have sufficient liquidity to continue operations?
3) Products & Services
What products and services exist today, and what’s on the roadmap?
How do these offerings compare to competitors?
Who are the most important competitors now and looking ahead?
What are those competitors’ strengths and weaknesses?
What are the costs and margins by product/service line?
Who are the key vendors and suppliers?
4) Customers & Markets
In which states and countries does the company operate?
How would you describe the customer base/segments?
(For B2B) Who are the most important customers?
What marketing campaigns are active and planned?
5) Technology Assets
Which software and hardware are in use?
Which software licenses are currently active?
How utilized are the company’s IT assets?
How old is the hardware fleet?
Is any IT work outsourced? If so, to whom and for what?
What is the disaster recovery / incident response plan for breaches or data loss?
6) Intellectual Property (IP)
What IP does the company own, and who holds the rights?
Does the portfolio include patents, copyrights, trademarks, or trade secrets?
How is IP protected (policies, controls, registrations)?
What revenue is attributable to each IP asset?
What legal risks or exposures are associated with each IP asset?
7) Physical Assets
What real estate does the company own or control?
Are there deeds, leases, or mortgages on those properties?
What inventory and equipment are on hand?
8) Legal / Regulatory / Insurance
Which laws and regulations apply to the business and its industry?
Is the company subject to environmental regulations?
What permits or licenses are required to operate?
What is the company’s litigation history (past, current, anticipated)?
Are there injunctions or settlements related to that litigation?
What insurance policies are in place (e.g., professional liability, workers’ comp, vehicle, property, key person, IP/patent)?
Could the contemplated transaction raise antitrust concerns?
Benefits of Using a DDQ
For Founders: Speeds up the fundraising process by building investor confidence.
For Investors: Helps identify risks, red flags, and compliance gaps.
For Teams: Creates internal clarity on documentation and structure.
DDQ Alternatives or Complements
Data Rooms: A secure space to host DDQs and related documents. (Use Plox for secure, trackable virtual data rooms.)
Investor Briefs: Short summaries used in early conversations.
Pitch Decks: High-level overview but not a substitute for a DDQ.
Best Practices for Founders
Start Early: Don't wait for investors to ask.
Use a Template: Saves time and ensures nothing is missed.
Update Regularly: Keep it aligned with your business updates.
Host it in a Data Room: Use platforms like Plox for access control, viewer tracking, and security.
Want to impress investors during due diligence?
Set up your DDQ inside a secure Plox data room.
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