How to evaluate startups for investment in India: six checks

A pitch deck tells you what a founder hopes will happen. Six checks tell you what is already true, and you can start most of them before the first call.

India now has over 2.3 lakh startups recognised by DPIIT, according to a Press Information Bureau backgrounder from June 2026. You can't meet them all. Nobody can. So the question isn't how many decks you read; it's which ones earn your week, and you'll answer it faster with a fixed order of checks than with more meetings.

Why evaluate startups in a fixed order

Evaluating early-stage startups in a fixed order means each company faces the same questions, in the same sequence, before anyone spends a partner meeting on it. You stop comparing decks and start comparing companies. And you see where a company is weak while finding out is still cheap.

Diligence is the slow part. In a survey of 885 venture capitalists, Paul Gompers, Will Gornall, Steven Kaplan and Ilya Strebulaev found the median firm considered 100 deals for every one it closed. Their full paper puts the average deal at 83 days to close, with 118 hours of due diligence and 10 reference calls. Most of those firms are American. The lesson isn't: when diligence costs this much, the order you run it in decides how much of it you waste.

We use six due diligence parameters at MyStartupValley: founder verification, market sizing, cap table, legal, client agreements and compliance. They're also the evidence you read on an evaluated startup card in MSV. Here's each one, in the order we'd run them.

The people and the market

Start with the two checks that need nothing from the founder: who the founder is, and whether the market slide holds up. Public records and a few phone calls cover both. A company that fails either one rarely deserves the rest of your diligence time, so don't give it.

1. Founder verification

At the early stage, the founder is most of what you're buying. Confirm the basics from company filings and the founder's public record: degrees, past roles, past companies and how each one ended. Then call people the founder didn't list. A former co-founder. An early employee. A customer who left. They'll tell you how this person behaves when things go wrong, and no reference list is built to show you that.

2. Market sizing

Every deck has a market slide with a large number on it. Ask how the founder got there. You want the bottom-up version: how many customers of this kind exist, what one of them pays in a year, and how many the company can reach with the sales team it has today. If the number only works top-down, as a slice of some huge industry figure, it's a hope. Treat it like one.

The ownership and the paperwork

Once a company clears the first two checks, find out who owns it and whether it owns what it sells. These checks need documents, so they usually start after a first meeting. Send the questions before it, though. How fast the answers come back is itself a signal.

3. Cap table

A cap table is the one page that can quietly end a round. Take the founder's spreadsheet and reconcile it with the register of members and the share allotment filings at the Ministry of Corporate Affairs. Does the ESOP pool exist on paper, or only in the deck? Are there convertible instruments waiting to turn into equity? Does any shareholder hold a right that could block your round? If the spreadsheet and the filings disagree, believe the filings.

4. Legal

Check that the company owns its product. Code a founder wrote before incorporation, or that contractors wrote later, belongs to the company only if someone signed an assignment. Read the incorporation documents and any shareholder agreement for rights that survive into your round. Then ask plainly about disputes, notices and pending claims. You'd rather hear it now.

The revenue and the record

The last two checks test the numbers early-stage investors find most persuasive: revenue and a clean history. They depend on the data room, so they come last. They're also the checks most likely to change your price, or your decision.

5. Client agreements

Early revenue is the easiest number to dress up. Separate signed contracts from pilots and pipeline. Check each contract against its invoices, and each invoice against a bank receipt. How much revenue sits with one client? How easily can that client walk away? Does anything change if the company is sold?

6. Compliance

Look at annual ROC filings, GST returns, tax deducted at source and, where foreign money came in, the reporting it required. Missed filings rarely kill a company. Most can be put right with a fee and some paperwork. What matters is whether the founder knew about them before you did.

Late filings can usually be fixed. A founder who didn't know about them is a different finding.

What to do before the first call

Before the first call, run checks 1 and 2 yourself and send the founder the questions for checks 3 to 6. A founder who answers within days has a working data room. That tells you something before you've opened a single file.

• Founder: two references the founder didn't choose.
• Market: the bottom-up market math, on one page.
• Cap table: the spreadsheet and the register of members, side by side.
• Paperwork: IP assignments, signed client contracts and the last two years of filings.

Founders on MSV prepare for exactly these questions; here's how a founder gets a profile and data room ready before anyone on the other side sees the company. There are 5,000 founders from incubators at IITs, IIMs and accelerators running on MSV, and our team evaluates each startup on these six parameters before it reaches your dedicated workspace. Want to start from companies that are already evaluated, with sector and stage fit? See the investor workspace.

Questions

How do you evaluate an early-stage startup with little revenue?

Weigh the founder and the market math first, because there is little revenue to test. Check who the founder is through references they did not list, then rebuild the market size from customers and price. Revenue checks still apply to any signed contract, however small.

What documents should an investor ask for during due diligence in India?

Ask for the shareholder register and share allotment filings, the shareholder agreement, IP assignment agreements from founders and contractors, signed client contracts with their invoices, and recent ROC and GST filings. A founder who keeps a complete data room can share all of these within days.

How long does startup due diligence take?

In a survey of 885 venture capitalists, mostly in the US, the average deal took 83 days to close and the average firm spent 118 hours on due diligence. India-specific figures are not published, so plan for weeks, not days, and start with the checks public records can answer.

Sources: Press Information Bureau, Empowered Youth, Stronger Nation (backgrounder), 13 Jun 2026 · Gompers, Gornall, Kaplan and Strebulaev, How Do Venture Capitalists Make Decisions?, NBER Working Paper 22587, 2016 (Journal of Financial Economics, 2020) · NBER Digest, How Venture Capitalists Make Decisions, Dec 2016