Most startups face the need to go through technical due diligence when seeking funding or making an exit. This procedure helps validate a product’s technical capabilities and true value, identifying potential problems and opportunities for growth. Let’s take a closer look at tech due diligence and help you prepare for such an audit.
As we’ve shortly mentioned above, technical due diligence (TDD) is a critical auditing process that’s used to check the tech infrastructure of a company. It’s necessary to identify areas of risk or potential for improvement, as well as evaluating various areas that make up a product.
When Do TDD Audits Occur? ⏰
Technical due diligence can take place at any point in the startup’s journey, but it typically happens during fundraising or acquisition talks. By going through the process, startups can demonstrate they have a strong handle on their product, from tech infrastructure to quality code and beyond, convincing all parties involved that the product is worthy.
The process can take anywhere from half a month or more, and this depends on how intricate the product is and the discussed TDD requirements that will be checked.
But Who Initiates This Process? 🤔
In many scenarios, it’s the investors, acquirers, or potential buyers who want to make sure they’re investing money into something worthwhile. Similarly, undergoing technical due diligence can also be proactive for startups or product owners. This process can help them identify any gaps or inefficiencies that could hinder growth, providing an opportunity to make improvements.
What’s the Tech Due Diligence Process Like? 🔍
It is common that a third-party organization that specializes in TDD handles the audit of the product. This is a way to play fair and get an evaluation of the product that’ll be unbiased.
There’s no single all-purpose algorithm of how the tech due diligence is held, yet the process often includes signing NDAs, holding kick-off meetings, studying the current state of various criteria, interviewing developers, and providing a comprehensive report.
Keep reading to learn the peculiarities of each of the tech due diligence steps and find out which aspects and criteria get reviewed during the audit. Plus, you can browse actionable tips that’ll help prepare for TDD and can get a hold of a handy checklist 👇