It happens more often than founders expect. The term sheet is signed, the lead investor's lawyers send a long due diligence list, and the company can answer maybe half of it. The product is good and the numbers are growing. The paperwork behind it is a mess, and the round slips by months while it gets cleaned up. Most rounds that stall in the Kingdom do not stall on valuation. They stall on the boring parts.
Start with the company form
If you are still an LLC and you plan to bring in outside investors, look hard at the simplified joint stock company, or SJSC. It was created by the Companies Law, which has been in force since 19 January 2023, and the Ministry of Commerce described it at launch as a form suited to SMEs and venture capital.
Why investors like it is simple. Under the Companies Law, an SJSC can issue common, preferred and redeemable shares (Article 108), and its shares change hands through the company's own shareholder register rather than the commercial register (Article 25). An LLC only has equal partner interests. So the preference terms a VC normally asks for are much easier to build into an SJSC.
Converting takes time and legal work. Do it before you start pitching, not after the term sheet lands.
What the due diligence list really looks at
Every fund has its own checklist. In our experience the questions come back to a handful of areas.
Ownership. Is the cap table on paper the same as the cap table in the commercial register and the articles of association? Promised founder equity, an early advisor's 2% agreed on WhatsApp, a co-founder who left and never signed anything. These all surface here.
Compliance certificates. Investors want to see that the company is clean with ZATCA for zakat and VAT, registered and paying with GOSI, and holding a valid CR and, for foreign-owned companies, a valid MISA licence. A single overdue VAT return can turn into a condition precedent in the investment agreement.
Financial statements. Management accounts are fine for a pitch deck. For a priced round, most investors want financial statements that are reviewed or audited and that match what was filed on Qawaem. If last year's numbers were put together in a hurry, expect questions about revenue recognition and related party balances.
Contracts and IP. Who owns the code? If a freelancer or an overseas agency wrote it, there should be a written assignment to the company.
A note on where the money comes from
Saudi Venture Capital (SVC), a subsidiary of the SME Bank, invests in VC funds and also invests directly. As of November 2026, its programs page lists a minimum direct ticket of SAR 1,000,000, with its share capped at 30% of each round. In practice that means you still need a private lead investor, and that lead will run full diligence.
How long the clean-up takes
It depends on how much has drifted. A company with up-to-date bookkeeping, filed returns and a tidy cap table can be diligence-ready in a few weeks. A company with two years of unreconciled accounts and undocumented founder deals can need a quarter or more. The accounting and audit side can go to our associate firm, Gadwalah CPA, while we handle the structuring and investor-facing work.
Our advice is plain. Run your own due diligence six months before you plan to raise. Fix what you find, then go out to investors with a data room you would be happy to defend.
FCG's Startup Funding advisory helps founders get investor-ready, from company structure and financial models to data room preparation and term sheet review.
Book a free consultation and we will tell you honestly how ready you are.
