Technical Due Diligence: The Complete Guide
What is technical due diligence?
Technical due diligence is a systematic evaluation of a company's technology, codebase, architecture and engineering practices, used by investors and acquirers to assess technical risk before committing capital. It normally covers security, code quality and architecture, technical debt, testing and CI/CD, and team practices, and it typically runs after a term sheet and before close.
What do investors actually check?
Investors examine seven things: exposed secrets and credentials, dependency vulnerabilities, architecture and scalability, test coverage and CI/CD, a technical debt inventory, security practices, and documentation and onboarding. The finding that damages a deal is rarely messy code — it is a problem the founders did not know they had.
- What Do Investors Look For in a Code Audit? The Due Diligence ChecklistPreparing for investor due diligence? Here's exactly what VCs and acquirers check in your codebase — and how to prepare before they look.March 21, 2026 · 9 min read
- Technical Due Diligence: What Investors Check in Your CodeLearn what technical due diligence means for founders raising capital. Understand what investors examine, how to prepare your codebase, and avoid deal-killing surprises.September 9, 2026 · 8 min read
What makes a deal fall apart?
Deals are repriced or abandoned over discoveries, not imperfections. Exposed production credentials, a licence obligation that threatens the product's IP position, a dependency surface nobody can account for, or a codebase only one departing person understands — each of these turns a valuation conversation into a risk conversation.
- 10 Codebase Red Flags to Catch Before You Acquire a CompanyMost acquisitions that fail do so for avoidable reasons. Here are ten codebase red flags that signal hidden cost and risk before you sign — in business terms.September 9, 2026 · 11 min read
- Open-Source License Risk: The Legal Debt Hiding in Your CodeTwo-thirds of audited codebases now have license conflicts. Here's how copyleft and AI-generated snippets create legal debt — and how founders should decide what to fix.September 9, 2026 · 9 min read
How to prepare before diligence starts
Audit yourself first. Running your own review and disclosing known issues alongside a prioritized plan builds credibility and protects the valuation; letting an investor's analyst find the same issues mid-process is what damages a deal. Preparation also means having an SBOM, a dependency inventory and current documentation ready before they are requested.
- Do You Need a Code Audit Before Raising Funding?If your round involves technical due diligence — most seed-plus rounds do — auditing your own code first turns surprises into a story you control. Here's how to decide.September 9, 2026 · 7 min read
- What Is an SBOM? A Founder's Guide to the Software Bill of MaterialsAn SBOM is an itemized list of every software component your product depends on. Here's why founders, acquirers, and enterprise buyers increasingly demand one.September 9, 2026 · 10 min read
- Code Audit Checklist: What to Review Before Launch or FundraiseA practical code audit checklist for startups. Cover security, architecture, dependencies, testing, and documentation before your launch or investor due diligence.September 9, 2026 · 10 min read
Reading the report you get back
A diligence report is written for decisions, not for engineers. Work from the executive summary to the prioritized fix plan, and treat severity ratings as a queue rather than a verdict. A list of problems is only useful once it has an order, an owner and a cost attached to each item.
- How to Read a Code Audit Report: A Non-Technical Founder's GuideA code audit report can look like a wall of jargon. Here's a section-by-section framework for reading one as a founder — and knowing which findings actually matter.September 9, 2026 · 8 min read
- What Is Technical Debt? A Guide for Non-Technical FoundersTechnical debt explained in business terms. Learn what it costs, how it accumulates, and when to pay it down. A practical guide for startup founders and CEOs.September 9, 2026 · 9 min read
Frequently asked questions
When does technical due diligence happen?
Usually after a term sheet is signed and before the deal closes. It is standard from Series A onward, in most acquisitions, and whenever a buyer is taking a majority stake in a technology company. Earlier-stage rounds sometimes skip it, though that is changing as more products are built with AI assistance.
Can you fail technical due diligence?
Yes. A severe enough finding — a serious unaddressed security exposure, a licence problem affecting the core product, or a codebase that would need rebuilding to scale — can end a deal. More often it does not kill the deal outright but reduces the valuation or adds protective terms.
Who performs technical due diligence?
Either the investor's in-house technical team, a third-party firm they engage, or increasingly an automated assessment that the company runs on itself and shares. Many processes now combine them: an automated scan establishes the baseline, and human review focuses on what it flags.
What if my code is messy but works?
That is normal for an early-stage company and rarely fatal on its own. What matters is demonstrated awareness: showing you know where the weak points are, what they would cost to address, and why you deprioritised them is a stronger position than a codebase that looks tidy and hides surprises.
Audit your own codebase
Paste a GitHub link for a security scan, architecture map and prioritized fix plan in under three minutes. Free on public repositories.