The Pre-IC Deal Readiness Standard: Verified, Conditional, or Not Ready

Deciding whether a sourced deal is ready for the partner vote is a grading problem, not a document-collection problem. This standard is for early-stage investors, platform and talent partners, and angels who need to say, out loud and defensibly, whether a diligence packet is done. It turns "does this feel ready?" into one of three grades - Verified, Conditional, or Not Ready - scored claim by claim so two partners reading the same packet would land on the same verdict.

Most diligence checklists online are request lists aimed at founders assembling a data room. This is the other side of the table: the rubric the investor uses to decide if what came back is enough to bring to a vote. It spans team, company, market, and traction claims in one gradeable pass, and it insists that each decisive claim be tied to a named public or primary source with a stated shelf life.

What the three grades mean

A deal is Verified when every load-bearing claim is tied to a named primary or public source, reference calls are complete including off-list voices, and the chain of IP title is clean. Conditional means the thesis is intact but one or more decisive claims still rest on founder-supplied evidence or unfinished checks, and the memo names each condition. Not Ready means a load-bearing claim is unverifiable, a screen surfaced a red flag, or the packet has not cleared basic team and IP review.

The grade attaches to the packet, not to your enthusiasm. Hustle Fund's method is claim-first: write down the three to five claims that must be true for the investment to work, rank each by impact and uncertainty, and those claims become your diligence plan. The grade is simply the worst grade any load-bearing claim earns. One un-corroborated decisive claim caps the whole deal at Conditional, however strong the rest.

The point of three grades rather than a yes/no is that Conditional is a legitimate, common outcome. In competitive rounds investors deliberately shift diligence to the post-term-sheet window, which means the packet at IC is structurally thinner by design. Grading that packet Verified would be dishonest; grading it Not Ready would lose the deal. Conditional with named conditions is the correct answer, and the confirmatory window is where those conditions get cleared.

Which claims are load-bearing, and by stage

Load-bearing claims are the three to five statements that must be true for the investment to work, and they cluster into five categories: team, market, product and traction, business model, and ownership and legal. What you weight shifts sharply with stage. At pre-seed, weight founders, problem insight, customer discovery, prototype, use of funds, and ownership basics. At seed, add retention, unit economics, go-to-market repeatability, hiring, security, contracts, and a fuller financial review.

Kruze frames the effort itself as stage-scaled: the amount of effort put into diligence increases dramatically depending on stage, because pre-seed and seed companies do not have reams of historical financial data, whereas Series B and beyond require deep examination. So the rubric does not grade every category with equal severity at every stage. It grades the claims you flagged as load-bearing, and at pre-seed those lean toward team and problem insight rather than a financial audit.

The discipline is to name the claims before you touch the data room. If you cannot state, in one sentence each, the three to five things that must be true, you have not framed the deal - you have a folder of documents. A well-framed claim reads like "the two named founders built the core product themselves and own the IP," not "the team is strong."

How to verify each claim, and what it looks like when it lies

Every load-bearing claim needs a source, and the source has to be one that cannot be faked as easily as the claim. The rule is simple: founder-supplied evidence supports a Conditional grade; independent primary or public evidence supports Verified. A revenue figure spoken in a meeting is a claim. The Stripe dashboard behind it is evidence. Hustle Fund is blunt about the gap: for revenue claims, ask to see the Stripe dashboard or bank statements, and if the founder hesitates, that is a red flag.

The table below pairs the most common load-bearing claims with the source that verifies them and the false positive that source is designed to catch.

Read that "when it lies" column as the heart of the standard. Every criterion has a failure signature, and a grader who does not know the signature will pass a coached deal. "Our CTO worked at Google" can mean a contractor for three months; the check is employer dates, not the LinkedIn self-description. A signed partnership that turns out to be verbal is not a partnership; the check is the executed PDF. If everything is verbal or in progress, it does not count toward Verified.

The reference-call bar for a Verified traction grade

Traction is not Verified until at least one paying customer you selected from the founder's full list confirms it. Founder-chosen references are the classic false positive: three coached, happy calls that pass any rubric which only counts calls. The fix is procedural. Do not call the three the founder suggests; ask for the full customer list, then you pick who to call.

How many calls constitute "enough" depends on your firm, and named sources spread widely. The dossier's figures below are directly comparable counts, so adopt one as policy and write it into the rubric.

CRV tells founders to aim for five to seven total conversations, including VC-provided references, backchannel references you find yourself, and if possible founders from companies that struggled or failed. Hustle Fund sets a floor: talk to at least three real customers who pay money and at least two investors not suggested by the founder. Top-tier firms are reported to run 10 to 20-plus reference calls per deal, targeting people the founder names and people the founder does not.

The number is not the point. The composition is. The decisive reference is the one the founder did not pick. Firms run 15 to 25 calls precisely to reach off-list people, so a Verified grade on traction requires at least one off-list customer and at least two off-list investors, regardless of your total count.

Backchannel is where the market's geography starts to matter. In Refolk's index of professional profiles, US professionals holding Venture, Investment, or General Partner titles outnumber their UK counterparts by roughly 11.9 times. That makes lining up off-list co-investor references far easier on a US deal. On a UK deal, "talk to prior investors" is a scarcer, slower check, so budget more time and expect Conditional to sit longer.

Finding the customer references the founder did not hand-pick is the other half of that work, and it is exactly the "just ask" job Refolk is built for. Instead of accepting three warm intros, you can name the role and the market and get back the operators who would actually know.

The step-by-step readiness procedure

The procedure runs from framing the claims to closing confirmatory diligence. It is written to fit the early-stage timebox: seed diligence before the term sheet runs 2 to 4 weeks, and the confirmatory window afterward is roughly 30 days. Steps 3 and 4 run in parallel.

On timing: the memo itself is not the bottleneck at early stage. An institutional investment memo can take two weeks to as long as a year, averaging about two months, but a PE analyst can turn a memo in 2 to 4 days. For a sourced seed deal, the grading work in steps 1 through 5 is the load; the write-up is a formality once the claims carry sources.

How this grade goes wrong

Every failure mode here is a false positive: something that reads as Verified but is not. This is the most valuable part of the standard, because a rubric that only counts checkboxes will grade a coached deal green. Each row names the trap and the check that defeats it.

Two of these deserve extra weight. The first is IP, the highest-frequency silent killer. A named practitioner reports investors find missing IP assignments at Series A more often than any other diligence issue. It survives to diligence undetected because paying a contractor does not transfer IP by default; the mechanism is a legal default rule, not fraud. The documented cost is severe: in one case, diligence revealed a co-founder built the core algorithm while employed at Amazon with no assignment agreement, the VC killed the deal, and six months later the round closed at half the original valuation with 15% equity surrendered. Confirm a signed invention-assignment agreement from every founder, employee, and contractor, and check the contributor list against the company's public code.

The second is the warm-partner illusion. A friendly partner meeting is not a done deal; enthusiasm followed by silence while backchannels run is the normal shape of a deal collapsing. The rule holds: the grade is only Verified when the calls are complete, never when the room feels good.

The decisive reference is always the one the founder did not choose for you.

Shelf life: why a Verified grade decays

A Verified grade is a snapshot, not a certificate. No public source publishes a signal-by-signal shelf life, so treat this as an original discipline rather than a citable standard. The anchor is the roughly 30-day confirmatory window, which is where a Verified grade goes stale rather than where it is earned. Between 15% and 25% of signed term sheets never close, and the cause is usually references going sideways or financial projections failing under re-check.

The cap table is the fastest-moving signal, because each new SAFE re-models ownership. A packet graded Verified three weeks ago may carry an ownership picture that is already wrong. This is the four-week window where most founders relax, and the deal can still die here. Do not relax with them.

Practically, this means the confirmatory window is not a victory lap. Re-pull the cap table, re-confirm the one or two references that carried the traction grade, and re-check that projections still hold. If any of those move, the grade drops from Verified back to Conditional and the memo gets a note before the wire.

The completeness checklist

Run this before you call any deal Verified. It is the checkable form of everything above: each item is a statement you can mark true or false, and a Verified grade requires all of them true. Anything false pushes the grade to Conditional or Not Ready.

Keeping the standard current

Adopt this as team policy by fixing three numbers to your firm and re-checking them, not the underlying method. First, your reference-call count: pick 5 to 7, or the 3-customers-plus-2-investors floor, or 15 to 25, and write it into the rubric so no partner grades traction by a different bar. Second, your timebox: seed diligence at 2 to 4 weeks and confirmatory at roughly 30 days are typical, but a competitive round compresses the pre-term-sheet phase, so default such deals to Conditional and lean on the confirmatory window.

Third, re-verify decay signals inside the confirmatory window every time, because the cap table and customer references are the two that move. The method - claim-first framing, primary sources for decisive claims, off-list references, a clean IP chain, and an explicit grade - does not expire. The evidence behind any single deal does. Grade the packet, name the sources, state the shelf life, and re-pull what moves before the wire.