Three modern diligence questions reliably kill consumer Series A and Series B deals. Each is fixable in advance. Almost none of them are addressed before the data room opens.
Most founder businesses preparing for a Series A or Series B believe their main risk is the financial model.
The financial model is rarely the killer. Three other questions are.
Retailer concentration. Co-manufacturer capacity. Trademark completeness.
Each of these has killed deals I have seen at the partner-vote stage, after eight weeks of investor work, with the founder believing the round was a formality. Each is fixable in advance. Almost none of them are addressed before the data room opens.
Kill-switch one: retailer concentration
If a single retailer accounts for more than 25 to 35% of your revenue, every Series A diligence pack will flag it. The investor is not flagging it because they do not like the retailer. They are flagging it because the brand’s enterprise value is hostage to a third party’s decisions.
The fix is not eliminating the concentration overnight. It is naming it, contextualising it, and building a credible 24-month plan to reduce it. The artefacts the investor wants to see:
- The 9-segment customer or retailer concentration read, with each top-five retailer named and risk-scored.
- The renewal calendar for every contracted relationship in the top quartile.
- The DTC and lower-quartile growth plan that absorbs the concentration over the next 24 months.
- The conversation that has been had with the dominant retailer about the strategy. Investors will ask.
Concentration is rarely the deal-killer. Concentration that the founder cannot articulate is.
Kill-switch two: co-manufacturer capacity
If your products are made by a contract manufacturer, the diligence question is structural. Can the co-manufacturer scale with the brand? What is their capacity utilisation today? What is their contractual commitment to your business? What is the alternative if the relationship breaks?
Many founder brands have grown to $3m to $10m on a single co-manufacturer relationship that has been stable for years. The relationship feels safe. From an investor’s perspective it is a single point of failure.
The artefacts the investor wants to see:
- The co-manufacturer agreement with capacity commitments, lead times, exclusivity terms, and termination provisions.
- A capacity utilisation read on the co-manufacturer (their total capacity, your share, their other clients).
- The contingency plan if the relationship breaks: secondary co-manufacturer identified, qualified, sample-tested.
- The roadmap for either owning capacity or signing a parallel co-manufacturer as the brand scales.
A co-manufacturer that has been stable for five years is not the same as a co-manufacturer that has been stress-tested.
Kill-switch three: trademark completeness
This is the simplest of the three and the most consistently fatal.
If your brand name, key product names, key claims, or signature design elements are not registered as trademarks in every major market you operate in or plan to enter, the diligence process will surface it. A live trademark issue at the partner-vote stage is one of the most common deal-killers because it is binary. Either you own your brand or you do not.
The pattern is almost always the same. The founder registers in their primary market early. They expand into a second market without registering. A local operator in the second market registers their name first. By the time the founder notices, the local registration is unwinding-expensive.
The artefacts the investor wants to see:
- The trademark register for the brand, every key product name, and any signature design element, across every market the business operates in or plans to enter in the next 24 months.
- The clearance opinion from a trademark specialist on any markets where registration is incomplete.
- The IP register beyond trademarks: design rights, copyrights, any patents.
The trademark work is roughly $5k to $25k depending on geography. The cost of discovering a gap during diligence is the deal.
What to do before the data room opens
A diligence-readiness review six to twelve weeks before opening a raise. Score the business on the three kill-switches. Identify gaps. Sequence the remediation work so it lands before the investor’s diligence team finds it themselves.
The remediation work itself is rarely complex. It is concentration mapping, supplier diversification planning, and IP work. None of it is intellectually demanding. The pattern that kills deals is not the difficulty of the fix. It is the embarrassment of the gap.
This work sits inside the Raise Readiness Sprint. It also sits inside the Fractional CFO Retainer as a quarterly review for founders who are not yet raising but want to be diligence-ready when the raise arrives.
If you are within twelve months of opening a Series A or Series B, the Snapshot scores raise readiness across the ten-dimension diagnostic and is the fastest way to know whether the kill-switches are clean.