What does technical due diligence cover?
Technical due diligence covers five areas: architecture and scalability, security and GDPR posture, cloud cost and unit economics, technical debt, and dependency and vendor lock-in risk.
Technical Due Diligence
What investors find when they look under the hood.
Technical due diligence is where technical risk gets priced into the deal. We help investors and founders assess and prepare with clear, evidence-led findings.
6–12%
Typical valuation impact when GDPR gaps are found at DD rather than resolved beforehand
40%
Fewer deal repricing events when architecture is reviewed before the data room opens
2–4
Weeks for a thorough independent technical DD, not the six-week engagement firms bill for
What it is
Not a code review. A commercial risk assessment.
Technical due diligence evaluates whether a company's technology foundation supports the deal thesis and valuation.
It is broader than a code review or penetration test. It is a risk-weighted assessment of architecture, security, delivery capability, and operating resilience.
For most Seed and Series A rounds, independent DD completes in about 2 to 4 weeks. Earlier preparation lowers surprise risk and prevents rushed remediation during negotiation.
EU investors carry specific regulatory obligations. GDPR accountability extends to portfolio companies. Missing DPAs, cross-border data without SCCs, and unaudited AI features require resolution or disclosure.
For regulated sectors, NIS2 and sector-specific frameworks add a layer most generalist DD advisors miss.
A DD advisor who also sells implementation carries an obvious conflict. We carry no commercial relationships with vendors we evaluate, and we do not profit from what we find.
What investors check
Five areas that determine whether the deal holds.
01
Architecture and scalability
Can the system support growth without a rewrite, and is architecture documented enough to reduce key-person risk?
02
Security and GDPR posture
Missing DPAs, weak access controls, and unprotected personal data create regulatory and commercial risk in EU transactions.
03
Cloud cost and unit economics
Investors test whether cloud spend and unit economics stay defensible at scale, not just at current volume.
04
Technical debt map
Debt is expected. Hidden debt without ownership or reduction plan is what triggers valuation pressure.
05
Dependency and vendor lock-in
Dependency concentration and lock-in risk are examined closely, especially when migration paths and access controls are unclear.
- 6–12% Typical valuation impact when GDPR gaps found at DD
- Versus resolved beforehand
- −40% Fewer deal repricing events with pre-data-room architecture review
- Independent review before investors open the room
- 2–4 Weeks for thorough independent technical DD at Seed/Series A
- Not six-week engagement theatre
How to prepare as a founder
Four steps to take before the data room opens.
The best-prepared founders treat technical DD as a process they run on themselves first. The goal is a documented, understood stack with honest answers for the gaps.
✓
Commission an independent pre-DD audit before investors do, giving time to fix what can be fixed
✓
Create architecture overview, vendor list, cloud cost breakdown, and GDPR processing register before the data room opens
✓
Patch known critical vulnerabilities, missing DPAs, and shared credentials. Document what cannot be fixed with a remediation timeline
✓
Prepare written explanations for known weaknesses. Proactive disclosure beats investor discovery
Common red flags
What gets flagged and reprices the deal.
None of these are automatically deal-killers. All require an explanation. The ones without a prepared answer are the ones that cost valuation points.
✓
No staging environment, production is used as test
✓
Infrastructure that is not documented and not reproducible from code
✓
GDPR data flows without signed Data Processing Agreements in place
✓
Cloud access shared via personal accounts with no rotation policy
✓
Single engineers who hold critical institutional knowledge with no documentation
✓
Vendor contracts with auto-renewal terms the team does not know about
✓
Critical dependencies with security patches multiple major versions behind
✓
No audit log for who has accessed production data or when
FAQ
Questions about technical due diligence.
How long does technical due diligence take?
A thorough independent technical DD takes 2–4 weeks at Seed or Series A. Series B+ and M&A contexts are more rigorous and may take longer depending on access to engineers and infrastructure.
What is the difference between a technical audit and technical due diligence?
A technical audit is typically commissioned by the company itself for internal improvement. Technical due diligence is conducted by or for an investor or acquirer to assess commercial and technical risk before a transaction closes.
Can a founder commission their own technical due diligence before fundraising?
Yes. A pre-DD audit conducted before the data room opens gives founders time to fix what can be fixed and prepare honest, contextualised answers for what cannot. This reduces deal repricing risk significantly.
Where to go next
Related services and adjacent guides.
Technical DD is one engagement type within our Tech Strategy & Consulting service line. Related engagements include standalone tech audits, vendor due diligence, and build vs buy memos.
If you are an investor evaluating a target, see investor and portfolio teams. If you are a founder preparing for a raise, see startup and scale-up work.
Read the fractional CTO guide for senior technical advisory in a fundraising context. If AI systems are part of the risk profile, see Some Tech Work in AI.
Concrete solution
Bring the operational risk.You get a clear diagnosis and a concrete next step.
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