Key Questions Investors Ask in Tech Due Diligence

Technical due diligence (Tech DD) helps investors assess a company's technology, team, and risks before investing. Here's what you need to know:

• What It Covers: Reviews code quality, system architecture, and team capabilities.
• Why It Matters: Identifies risks, verifies scalability, and evaluates the team’s ability to execute.
• Common Questions:
  • "What are the strengths and risks of your tech stack?"
  • "How is your technical team structured, and can they deliver the roadmap?"
• Preparation Tips: Provide clear documentation (architecture, security protocols, team structure) and address potential weak spots early.

Investors and startups both benefit from being well-prepared for these discussions. Services like Metamindz can provide expert evaluations to refine your approach.

Technology Due Diligence 101: Secrets From an Auditor

Common Tech DD Questions from Investors

During technical due diligence, investors focus on understanding a company's technology and the team behind it. Two primary areas of interest are the tech stack and the team's structure.

Tech Stack Assessment

Investors want to identify the strengths, risks, and scalability of the company’s technology. A typical question they might ask is:

• "What are the main strengths and risks of your tech stack, and how well can it scale to support future growth?"

Team Skills and Structure

The technical team plays a critical role in delivering the product roadmap. Investors often inquire about the team's setup, expertise, and ability to meet goals. One common question is:

• "How is your technical team structured, what expertise do they bring, and do they have the capacity to execute your roadmap?"

The specifics of these questions depend on the stage and size of the investment. Startups should prepare clear documentation and relevant metrics to address these areas effectively.

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Tech DD Preparation Guide

Before diving into a technical due diligence review, it's essential to assess the risks within your system. This means evaluating your infrastructure, the quality of your codebase, and your team's capabilities to identify any potential weak spots that could come up during investor discussions. Taking these steps early helps you tackle issues head-on and sets you up for smoother conversations with investors.

Once you've completed your assessment, make sure your team is ready with clear, concise answers to investor questions. Be prepared to explain your technology choices and outline the responsibilities of each team member. This preparation ensures you're equipped to handle key questions about your technical setup and your team's ability to execute.

For additional support, you might want to bring in expert help. Metamindz offers a technical due diligence service that evaluates technical infrastructure. According to Metamindz:

"In-depth evaluation of businesses' technical infrastructure, we conduct comprehensive assessments of codebases, architectures, and development teams." ^[1]

Having expert input can provide actionable insights to refine your technology strategy, giving you an edge before investor evaluations.

Summary and Next Steps

Here's a recap of the preparation steps and actionable next steps for investors and startups to ensure smooth technical due diligence.

Investor Guidelines

Technical due diligence involves examining the technical infrastructure, codebase quality, and team expertise. Investors should request detailed documentation on areas like security, compliance, and scalability to make well-informed decisions.

Startup Checklist

To meet investor expectations, startups should focus on the following:

• Technical Documentation: Include architecture diagrams, API documentation, deployment procedures, and scalability plans.
• Security Protocols: Provide details on security measures, compliance certifications, and incident response strategies.
• Team Structure: Share organization charts and a breakdown of team skills.
• Product Timeline: Present a technical roadmap with milestones and resource allocation.

Professional Help

Technical due diligence can be challenging to navigate. Metamindz offers services to evaluate infrastructure, codebases, and development teams. Their fractional CTO service, priced at around $3,450 per month, delivers strategic insights and scalability planning tailored to investor requirements. This professional guidance helps uncover and address potential risks early in the process.

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