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What do UK venture capital firms ask in due diligence?
UK venture capital due diligence covers FCA permissions, ICO data checks and Companies House filings. Here is a founder's checklist of the questions asked.
What to take away
- A UK due diligence pack rests on three public registersCompanies House, the FCA register and the ICO.
- Expect questions on share capital, persons with significant control and EIS or SEIS advance assurance.
- Data protection and marketing claims are tested against evidence, not against a policy page.
- Assemble the answers before you open the data room; it takes longer than founders expect.
Why UK diligence differs from US-focused lists
Most checklists circulating online were written for Delaware incorporations. They ask about 83(b) elections, state franchise tax and option pools sized to US norms. None of it applies to a company registered in Cardiff or Edinburgh.
A UK round turns on different records. Companies House, the Financial Conduct Authority's perimeter and the Information Commissioner's Office each hold material an investor can check without asking you for anything.
The result is a narrower but deeper set of questions. Fewer boxes, more evidence, and a shorter tolerance for answers that cannot be traced to a document.
The compliance questions that come first
- Confirm your regulatory statuswhether you carry on a regulated activity under the Financial Services and Markets Act 2000, and whether your permissions are wider than the business needs under the FCA Handbook.
- Reconcile every person with significant control against the PSC register kept under the Companies Act 2006, including nominee arrangements and trusts.
- Show your data protection records under the UK GDPR and the Data Protection Act 2018: lawful basis, retention periods, processor contracts and the breach log, together with your entry on the ICO's register of fee payers.
- Trace investor money. Angel investors often need source of funds and anti-money laundering records under the Money Laundering Regulations 2017 before completion.
- Review marketing claims against the CAP Code enforced by the Advertising Standards Authority, particularly any stated returns or performance figures.
- Check whether any grant, loan or convertible note carries a charge, a covenant or a conversion trigger.
Crowdfunding adds a layer. The FCA's guidance on crowdfunding sets out what retail investors must be told, and investors will ask whether your earlier round followed it.
UK Compliance Diligence Questions
- Confirm regulatory status and permissions
- Reconcile PSCs against the register
- Show data protection records
- Trace investor money and AML
- Review marketing claims
- Check charges and conversion triggers
Founders who prepare early often work from a market entry checklist that defines the round, verifies the investors and models dilution before any dossier is shared.
Filings, share capital and tax relief
Investors read your filing history before they read your deck. They pull the confirmation statement (form CS01), the articles of association, the PSC register and every return of allotment (form SH01), then compare those records with the cap table you sent.
Mismatches cause more delay than missing documents. An allotment that was never filed makes the cap table look like guesswork, and the fix takes weeks.
If you intend to offer tax relief, expect questions about advance assurance and about whether the shares qualify. HMRC's published route to apply for the Enterprise Investment Scheme sets out the conditions, including the assurance step.
The questions investors ask about the business
Compliance is only the first pass. UK diligence then moves through the same ground in every round, whatever the sector.
Financial and commercial
Questionnaires open with your filed accounts and current management accounts, a revenue breakdown by customer and a cash runway forecast. Investors then ask how concentrated revenue is, how customers renew, what the gross margin is and how any debt or convertible note converts.
Intellectual property and contracts
You will be asked to prove ownership of the IP: assignment agreements from every founder and contractor, the position on open-source components, and any third-party licence the product depends on. On contracts, expect questions about customer terms, supplier agreements, exclusivity, change-of-control clauses and any dispute or threatened claim.
Team
The team questions are about lock-in: employment contracts for founders and key staff, share vesting, the option pool, and whether a departed founder still holds unvested shares. Investors also ask who holds decision rights and what happens if a key person resigns.
A question map for UK diligence
Treat this as a routing guide. Each area of questioning is matched to an official record an investor may consult before your first call, which is why accuracy matters more than polish.
Where UK Diligence Evidence Sits
Question area
- Share capital, allotments and charges
- Companies House filing history
- Directors, PSCs and registered office
- Companies House register
- Regulated activity and financial promotions
- FCA register and perimeter guidance
- Personal data and direct marketing
- ICO guidance and processing records
- EIS or SEIS qualification
- HMRC advance assurance
- Advertised returns or performance
- CAP Code and ASA rulings
Where the evidence sits
- Share capital, allotments and charges
- Directors, PSCs and registered office
- Regulated activity and financial promotions
- Personal data and direct marketing
- EIS or SEIS qualification
- Advertised returns or performance
None of these sources is hidden. That is the point. A UK dossier is judged against records that already exist, so gaps are visible whether or not you mention them.
Costs run alongside the legal work. Budgeting startup funding costs from dated official fees and live provider terms keeps the exercise realistic, because legal review and accountancy time are usually the two largest items.
Getting the evidence pack ready first
- A reconciled cap table and the latest confirmation statement.
- A schedule of regulatory permissions, or an explanation of why none apply.
- Records of processing, retention periods and processor contracts.
- Advance assurance correspondence on EIS or SEIS, if relevant.
Two working days of preparation removes most of the friction. The founders who lose time are usually the ones assembling evidence after the questions arrive.
Common questions
These come up in almost every UK round. The answers point to the records and rules behind them.
Does a UK venture capital firm check the FCA register?
Yes. Investors check whether you carry on a regulated activity under the Financial Services and Markets Act 2000, and whether your permissions in the FCA register match what you actually do. A mismatch is a standard reason to pause a round.
What will investors pull from Companies House?
The filing history, the confirmation statement (form CS01), the articles, the PSC register, any return of allotment (form SH01) and any registered charges. Expect them to reconcile those records with your cap table and with your share option agreements.
Is data protection part of UK venture capital diligence?
It is, particularly for consumer products. The UK GDPR and the Data Protection Act 2018 set out the records and contracts investors usually ask to see, and the ICO's guidance for organisations explains what to keep.
Do angel investors have to show source of funds?
Often yes. Anti-money laundering rules apply to certain transactions, and lead investors may ask for evidence even where the rules do not strictly require it.
