What is Technical Due Diligence? A Guide for Founders & Investors

What is technical due diligence?

Technical due diligence (Tech DD) is a structured assessment of a company’s technology — its architecture, code quality, infrastructure, team, processes, and security posture. It’s typically conducted during investment rounds, acquisitions, or strategic partnerships.

The goal is to answer a fundamental question: does the technology actually work, and can it scale?

For investors, Tech DD reduces risk by identifying hidden technical debt, security vulnerabilities, and scalability limitations before committing capital. For founders, a clean Tech DD report builds confidence with buyers and investors, and often accelerates deal timelines.

When does Tech DD happen?

Technical due diligence is most common in these scenarios:

• Venture capital rounds (Series A and beyond) — investors want to verify that the product has a solid technical foundation before scaling.
• Acquisitions and M&A — buyers need to understand what they’re actually acquiring, including hidden liabilities.
• Strategic partnerships — enterprise partners may assess your technology before deep integrations.
• Private equity transactions — PE firms routinely commission Tech DD as part of their investment thesis validation.

What assessors look for

A thorough Tech DD covers several dimensions. Here’s what’s typically in scope:

Architecture and infrastructure

• Is the architecture well-documented and appropriate for the product’s scale?
• Are services properly separated with clear boundaries?
• Is the infrastructure provisioned with infrastructure-as-code, or is it manually configured?
• Are there single points of failure?
• Can the system handle 10x current load without a rewrite?

Code quality and engineering practices

• Is the codebase well-organized, consistent, and maintainable?
• Are there automated tests with meaningful coverage?
• Is there a CI/CD pipeline with code review requirements?
• How much technical debt exists, and is it tracked?
• Are dependencies up to date, and are there known vulnerabilities?

Security posture

• Is data encrypted at rest and in transit?
• Are access controls properly implemented (RBAC, MFA, least privilege)?
• Has the product undergone penetration testing or vulnerability assessments?
• Is there an incident response plan?
• How does the company handle GDPR and other regulatory requirements?

For companies that have completed ISO 27001 or SOC 2 certifications, this section becomes significantly easier — the documentation and evidence already exist.

Team and organization

• Does the team have the right skills and experience for the product’s roadmap?
• Is there key-person risk (critical knowledge held by one individual)?
• What’s the team structure, and is it appropriate for the company’s stage?
• How is the team hiring and onboarding?

Product and data

• Is the product well-defined with clear user value?
• Is there a product roadmap aligned with business objectives?
• How is customer data managed, stored, and protected?
• Are there data migration risks or vendor lock-in concerns?

Intellectual property

• Does the company own its code? Are there open-source license risks?
• Are there any third-party dependencies with problematic licenses?
• Is IP properly documented and protected?

How to prepare as a founder

The best time to prepare for Tech DD is before anyone asks for it. Here’s a practical preparation guide:

1. Document your architecture

Create or update an architecture diagram covering your system components, data flows, and infrastructure. It doesn’t need to be perfect — assessors want to see that the architecture is understood and intentional, not discovered through archaeology.

2. Clean up your development practices

Ensure you have:

• Version control with branch protection
• Code review requirements before merge
• Automated CI/CD pipeline
• Meaningful test coverage (aim for 60 percent or higher)
• Dependency scanning and regular updates

3. Address security fundamentals

Implement the basics:

• MFA for all production access
• Encryption at rest and in transit
• Regular automated backups with tested restores
• Centralized logging and monitoring
• Access reviews on a quarterly cadence

4. Prepare a technical brief

Write a 3 to 5 page technical overview covering your architecture, technology choices, team structure, and known technical debt. Being upfront about debt shows maturity — hiding it creates risk.

5. Run a self-assessment

Use a structured framework to evaluate yourself before the assessor does. AuditFront’s Tech DD self-assessment templates cover the same areas that professional assessors review, so you know where you stand before the clock starts.

Common red flags

These are the findings that most commonly raise concerns during Tech DD:

1. No automated testing — a codebase with zero tests signals fragility and makes future changes risky.
2. Manual deployments — if deploying to production requires SSH access and manual steps, scalability and reliability are both at risk.
3. Single points of failure — one server, one database, one person who understands the payment system.
4. No documentation — assessors assume that undocumented systems are poorly understood, even by the team.
5. Unpatched vulnerabilities — known CVEs in dependencies that haven’t been addressed suggest security isn’t a priority.
6. Regulatory non-compliance — no privacy policy, no data processing agreements, no security certifications when the market demands them.
7. Key-person dependency — critical systems maintained by one engineer with no documentation or backup.
8. License violations — using GPL-licensed code in proprietary software without understanding the implications.

Timeline and process

A typical Tech DD engagement follows this timeline:

Phase	Duration	Activities
Preparation	1-2 weeks	Document sharing, access provisioning, kickoff call
Assessment	1-3 weeks	Code review, architecture review, interviews, security testing
Reporting	1 week	Findings compilation, risk rating, recommendations
Follow-up	1 week	Q&A, clarifications, remediation discussion

Total elapsed time is typically 3 to 6 weeks, though it can be compressed to 2 weeks for smaller companies.

The outcome

The Tech DD report typically categorizes findings as:

• Critical — issues that could block a deal or require immediate remediation
• High — significant risks that should be addressed within a defined timeline
• Medium — areas for improvement that should be part of a post-transaction plan
• Low — minor observations and optimization opportunities

A clean report doesn’t mean zero findings — it means no critical issues and a clear path to addressing the rest. Investors and acquirers expect some technical debt. What they don’t want is surprises.

Get ahead of the assessment

The companies that perform best in Tech DD are those that conduct regular self-assessments. Run AuditFront’s Tech DD framework assessment to evaluate your architecture, security, code quality, and processes against the same criteria that professional assessors use.

Start your free Tech DD self-assessment and know your score before anyone else does.