How to read a seed deal in twenty minutes

An experienced angel reads a listing in a fixed order and gets to "no" fast, or to "interesting" with a list of questions. The order matters because most deals fail on something simple — the structure, the ask, the founder's relationship to the numbers — and there is no point admiring the product if the cap table is broken. Here is the twenty-minute read.

Minute one to three: the card

What does it do, in one sentence? Who pays? How much are they raising, at what valuation, and what does that imply they are giving away? If you cannot answer the first two from the card, the founder cannot explain the business, and that problem does not improve in diligence. Raise ÷ (pre-money + raise) is the dilution; for a first round, 15–25% is normal. Under 10% means the valuation is stretched; over 35% means the founders will own too little after the next round.

Minute three to eight: the six numbers

Revenue, and for how long. Monthly recurring if it is software; monthly sales if it is not. Twelve months is a trend; three is a start; none is a pre-seed bet on people.
Growth rate. Month on month. Consistent 8–15% is strong; a spike then a plateau is a campaign.
Gross margin. What is left after delivering the product. Tells you what kind of business it is, whatever the founder calls it.
Cash and burn. How long they last without the raise. A founder raising with two months left is raising from weakness, and you should price that.
Customer concentration. One customer over 30% is a risk that must be named on the listing.
The milestone. What this money reaches, and whether that milestone makes the next round possible. If the use of funds is "eighteen months of runway", the founder has not thought it through.

Minute eight to fourteen: the documents

Plan, deck, forecast, accounts. You are not reading them; you are checking three things. Do the numbers in the listing match the numbers in the accounts? Does the forecast's first three months match the last three months of actuals? Are the assumptions in the forecast stated, and are they sane (growth rate, churn, hires, payment terms)? A forecast that doubles revenue in month four with no hire and no explanation is the founder's hope, not a model.

Minute fourteen to eighteen: the structure

Cap table: founders over 60% combined before this round; no departed founder with a large stake; no adviser with 10% for introductions; one class of shares.
Companies House: filings current, directors verified, no charges you were not told about, no dissolved companies in the founders' recent history without explanation.
SEIS/EIS: advance assurance granted or applied for, with the date. If "we think we qualify", price that in.
Instrument: ordinary shares for SEIS/EIS; an ASA is fine; a convertible loan note means no relief.

Minute eighteen to twenty: the founder

Watch the video. Not for polish — for whether they know their numbers, whether they say what is hard, and whether you would take a call from this person in a bad month. Then read their answers in the Q&A. A founder who answers a difficult question directly on the listing is telling you how they will answer it in a board meeting.

Red flags that end the read early

A promised return or "guaranteed" anything. Find removes these; if one slipped through, tell us.
Revenue that is actually pipeline, bookings or "contracted" without contracts.
A valuation with no reasoning behind it.
Founders paid from the raise with no agreed salary.
"Investors are lining up" with no lead named.
Any reluctance to share accounts with a certified investor who has indicated.

Before you heart

Write down three questions the listing did not answer. That is your opening message. A founder who answers all three well within a day has told you most of what you need; one who takes a fortnight has too.

Questions investors ask

"How much diligence is proportionate for £10,000?"

The twenty minutes above, the three questions, a call. If there is a lead investor doing full diligence, ask to see their summary. Beyond that, the relief is your protection; see the diligence guide.

"The founder is asking for a decision in a week."

Ask why. A real first-close date is legitimate; pressure with no reason is a signal.

See live raises All guides