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26 Essential Due Diligence Questions for SEIS/EIS Startup Investments

Introduction

Investing in early-stage businesses is a thrill. The upside? Huge. The risk? Equally real. If you’re using a startup investment marketplace like Oriel IPO, you’ve already made a smart choice. Commission-free. Tax-efficient. Curated deals. Educational resources. And even Maggie’s AutoBlog to keep your content fresh. But before you tap “Invest”, pause. Grab a notepad. You need to ask the right questions.

This guide lays out 26 essential due diligence questions for SEIS/EIS investments. We’ve grouped them for clarity. By the end, you’ll know how to dig under the hood of any startup. Let’s go.

Why Due Diligence Matters

Due diligence isn’t a box-ticking exercise. It’s your shield against nasty surprises.

  • It clarifies the business model.
  • It gauges market potential.
  • It protects your capital.
  • It helps you navigate SEIS/EIS tax relief.

A startup investment marketplace gives you easy access to opportunities. But you still need to vet each one. Here’s how.

Market & Opportunity Questions

  1. What problem does the startup solve?
    Identify the pain point. Does it matter on a local or global scale? If it’s niche, is that niche big enough?

  2. Is this a genuine problem?
    Sometimes founders chase a trendy concept. Look for evidence. Customer interviews. Third-party data.

  3. How large is the market?
    Use TAM, SAM, SOM. Total Addressable Market. Serviceable Available Market. Serviceable Obtainable Market. Big numbers don’t always mean big profits. But small markets may cap your gains.

  4. What are the latest market trends?
    Inflation rates. Regulatory shifts. Tech advancements. If the sector is hot, be ready for competition.

  5. Who are the direct and indirect competitors?
    Map out market share. Understand where the startup stands. Can they compete on price? On innovation? On branding?

  6. What’s the company’s unique selling point?
    A compelling USP cuts through the noise. Does the startup offer something truly different?

Team & Execution Questions

  1. Who are the founders and key team members?
    Look at LinkedIn profiles. Prior successes. Sector experience. A founder who’s scaled a company before? Big tick.

  2. How well-rounded is the team?
    Tech founders need marketing skills on board. Do they have legal or financial expertise?

  3. Are the founders coachable?
    A stubborn founder can sink a venture. You want openness to feedback. To adapt. To learn.

  4. What’s the hiring plan?
    Rapid growth needs more hands. Do they have a clear recruitment strategy? Budgeted roles?

  5. Does the startup have advisers or a board?
    Industry veterans on advisory boards can be a game-changer. If they’re absent, why?

  6. How will the team evolve?
    Early-stage ventures pivot. Will the team adapt? Add expertise? Delegate?

Product & Technology Questions

  1. What’s the current product roadmap?
    A clear timeline. Defined milestones. You want specifics, not buzzwords.

  2. Is there defensible intellectual property?
    Patents. Trademarks. Proprietary tech. Without protection, competitors can copy.

  3. How scalable is the technology?
    Can the platform handle 10× users? 100×? Check architecture and costs.

  4. What are the development costs?
    Ongoing R&D. Bug fixes. Feature builds. Assess burn rate.

Financial & Valuation Questions

  1. What is the current valuation?
    Pre-money. Post-money. Understand how they arrived at the number.

    • VC Method
    • Scorecard Method
    • Berkus Approach

  2. How will funds be used?
    Growth marketing. Hiring. Product development. Clear line items show discipline.

  3. Are there plans for future funding rounds?
    More capital can dilute your shares. But it can also validate growth. Tread carefully.

  4. What’s the revenue model?
    Recurring subscription? One-off sales? Freemium upsells? Look for proven cash flow.

  5. Are the financial projections realistic?
    Don’t let founders paint a Picasso. Ask for sensitivities. Worst-case. Best-case.

  1. Is the startup SEIS/EIS eligible?
    Check HMRC guidelines. If it qualifies, you could get 30% (EIS) or 50% (SEIS) income tax relief.

  2. Are there outstanding legal issues?
    Lawsuits. IP disputes. Regulatory investigations. These can derail growth.

  3. How is the cap table structured?
    Equity distribution. Investor rights. Stock options. Understand your position.

  4. What shareholder rights do you get?
    Voting rights. Information rights. Liquidation preferences. Some terms can lock you out of decisions.

Exit & Returns Questions

  1. What’s the exit strategy and timeline?
    Trade sale. IPO. Secondary market. Aim for a 3–7 year horizon. Longer holds affect IRR.

Bonus: What are the likely risks and returns?
Balance both. Early-stage startups can tank. But tax incentives via SEIS/EIS cushion the fall. A commission-free startup investment marketplace like Oriel IPO ensures you’re not losing fees to intermediaries.

Mid-article? Let’s pause.

Explore our SEIS/EIS deals

Putting It All Together

A smart investor uses a startup investment marketplace to find opportunities. But tools alone aren’t enough. You need to know where to probe.

  • Break down each area: market, team, product, finance, legal, exit.
  • Use bullet points. Tough questions.
  • Compare answers against your risk profile.

On Oriel IPO, you get:

  • Curated, tax-efficient SEIS/EIS deals.
  • Commission-free funding.
  • Educational resources: guides, webinars, insights.
  • Maggie’s AutoBlog for SEO-powered content

No hidden fees. No fluff.

Final Thoughts

Due diligence is a craft. The more you practice, the sharper you get. Use these 26 questions as your checklist. Combine them with the tools in our startup investment marketplace. You’ll invest with confidence. And remember – the right questions today can lead to big wins tomorrow.

Join our commission-free marketplace today

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