Due Diligence

Pre-Investment Due Diligence on an Indian Startup - What Angels Check

Angel and seed investors don't need a 200-page report - but they do need clean cap table, MCA filings, related-party clarity and no surprise charges. This is the short list we see term sheets stall on.

Angel cheques get written on pitch decks and founder chemistry far too often. A thirty-minute MCA check won't tell you if the product works - but it will tell you if the company actually exists, who's on the cap table, and whether the founders have left a trail of shell companies behind them. That's worth doing before the term sheet, not after.

Confirm the entity exists and is clean

Get the CIN and verify on MCA: Active status, incorporation date matching the pitch narrative, and registered office that isn't a mass virtual address. Our CIN verification guide covers the steps.

Watch for warning signs: strike-off proceedings, missing filings, or a company incorporated last month claiming five years of operations.

Cap table and shareholding from MCA

Pull the latest MGT-7 from filing history. Compare shareholding against what founders told you in the data room. Sudden dilution, opaque holding companies as shareholders, or promoter stake below what was claimed - all worth a direct conversation.

Check whether prior funding rounds created charges on company assets. Existing bank security affects your position as a new investor, especially in debt-heavy cap structures.

Founder and director background

Verify each founder's DIN and map their other appointments - DIN verification guide. You're looking for disqualification, deactivated KYC, or a pattern of incorporations at the same address with no filings.

What angels skip. Checking if the ESOP pool or prior convertible notes are reflected anywhere on MCA. They won't be fully visible - but charges, related-party loans in AOC-4, and share capital changes tell part of the story.

Public financials from AOC-4

Download the latest AOC-4 attachments or read parsed financials on Infyner. Early-stage companies often show minimal revenue - that's fine. What isn't fine: no AOC-4 filed at all, or numbers that wildly contradict the pitch deck without explanation.

For reading the balance sheet itself, see balance sheet due diligence for lenders - the same ratios apply to investment decisions.

Quick angel checklist

  • CIN verified, Active status confirmed
  • Latest MGT-7 reviewed for cap table
  • Founder DINs checked - no disqualification
  • AOC-4 filed for at least the prior year
  • No strike-off or MCA red flags
  • Charges reviewed for existing lender security
  • GSTIN verified if the company claims GST-registered operations

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Common questions

Is MCA due diligence enough before angel investment?

No. It's the baseline public-record check. You still need term sheet review, IP verification, and commercial diligence.

What if the startup has no revenue in AOC-4?

Normal for pre-revenue startups. Focus on whether filings are current and cap table matches the pitch.

Can founders hide shareholders from MGT-7?

Only shareholders below reporting threshold may not appear. Material stakes must be disclosed.

Should I check the startup's vendors too?

For related-party risk, yes. If major "customers" are companies where the founder is also a director, dig deeper.

How does this differ from Series A diligence?

Same MCA checks, but Series A typically adds full legal, financial, and tax DD. Angels should at minimum run this public-data screen.