Technical Due Diligence: What VCs Actually Look At

You are raising a Series A or Series B. The lead investor says they want to do "technical due diligence." They hire a technical advisor (usually a former CTO) who spends 2-4 hours interviewing your team, reviewing your codebase, and assessing your infrastructure. Their report can make or break the deal.

Here is exactly what they look at and how to prepare.

What technical DD evaluates

Technical due diligence answers one question: can this team build and scale the product with the capital we are investing? The evaluation covers six areas.

1. Architecture and scalability. The reviewer looks at your system architecture diagram (you should have one). They want to understand: Is the architecture appropriate for your current scale? Can it handle 10x growth? Are there single points of failure? Is the system modular enough to evolve as requirements change?

What impresses: clear architecture documentation, defined service boundaries, a database that is not at 80% capacity, and evidence that you have thought about scaling before being forced to.

Red flags: no architecture diagram, a monolith with no module boundaries, a single database that is already struggling, and "we will figure out scaling when we get there."

2. Code quality and development practices. They will pull up your repository and look at recent commits, PR reviews, test coverage, and code organization. They are not reading every line. They are sampling to assess the overall quality.

What impresses: consistent code style, meaningful PR descriptions, thorough code reviews, test coverage above 60%, and a CI pipeline that runs tests on every commit.

Red flags: no tests, PRs merged without review, inconsistent code style, and large commits with no description.

3. Infrastructure and operations. How is the application deployed? How is it monitored? What happens when things break?

What impresses: infrastructure as code (Terraform), automated deployments, monitoring dashboards, alerting with on-call rotation, and documented runbooks.

Red flags: manual deployments, no monitoring, no alerting, and "our CTO SSHs into the server when something breaks."

4. Security. Do you have basic security controls in place? This is not a full security audit. It is a smell test.

What impresses: SOC 2 compliance (or progress toward it), MFA everywhere, encrypted data at rest and in transit, dependency scanning, and a security incident response plan.

Red flags: no encryption, hardcoded secrets in code, no access controls, and "we have not thought about security yet."

5. Team and organization. Is the team structured for growth? Are the right people in the right roles?

What impresses: clear reporting structure, defined engineering levels, a mix of senior and junior engineers, low turnover, and a healthy engineering culture.

Red flags: flat organization with no structure, all junior engineers, high turnover, and a single person who is a bottleneck for all decisions.

6. Technical debt and risks. Every codebase has technical debt. The question is whether you know about it and have a plan for managing it.

What impresses: a documented list of known technical debt, a plan for addressing high-priority items, and evidence that you allocate engineering time to debt reduction.

Red flags: denial that technical debt exists, a backlog of critical bugs, and a team that is afraid to touch large parts of the codebase.

How to prepare

One month before DD, prepare these artifacts:

• Architecture diagram (current state and planned evolution)
• Development process documentation (how code goes from idea to production)
• Infrastructure overview (cloud resources, monitoring, alerting, backup)
• Security summary (controls in place, compliance status, recent pentest results)
• Team org chart with roles and levels
• Technical debt inventory with prioritization
• Key metrics: deployment frequency, uptime, test coverage, mean time to recovery

Do not fabricate anything. Experienced technical reviewers will see through it immediately. If you have gaps, acknowledge them and present your plan for closing them. Honesty about weaknesses is much better than pretending they do not exist.