Investment

Technical Due Diligence for Investors: What to Look For

You understand the market. The financials stack up. But how do you evaluate technology you didn't build -- especially when you're not an engineer?

Mike Tempest • 10 min read • 21 March 2026

Most investors are comfortable evaluating market opportunity, unit economics, and founder quality. But when it comes to assessing the technology itself, many rely on gut feel, the founder's confidence, or a quick glance at the tech stack. That is not due diligence. That is hope.

I have sat on both sides of this table. As Head of Engineering at RefME, I went through investor technical reviews. At Risika, I inherited a codebase that an investor's due diligence should have flagged before the cheque was written. As a Fractional CPTO, I now conduct independent technical assessments for investors who want the unvarnished truth.

This guide is for VCs, angels, and fund managers who want to evaluate startup technology properly -- without needing a computer science degree to do it.

The Investor's Problem: Asymmetric Information

Technical due diligence has a fundamental information asymmetry. The founders know their technology intimately. You don't. They can present a polished architecture diagram while the actual codebase tells a different story. They can claim "we use microservices and Kubernetes" when the reality is a monolith held together with duct tape.

This asymmetry doesn't mean founders are being dishonest. Most genuinely believe their technology is strong. But belief and evidence are different things, and your job as an investor is to close the gap between the two.

The companion piece to this article -- Technical Due Diligence: What Investors Really Look For Before Series A -- covers the founder's perspective. Reading both sides will give you a more complete picture.

5 Warning Signs the Technology Won't Scale

You don't need to read code to spot these. They show up in conversations, demos, and the questions founders can't answer.

The Solo Genius Problem

One developer built everything. They are brilliant. They are also the single biggest risk in the entire investment. If they leave, get ill, or burn out, the company's technology effectively dies with them.

What to ask: "If your lead developer left tomorrow, how long before a new hire could ship a feature independently?" If the answer is measured in months, you have a problem. If the founder can't answer at all, you have a bigger one.

The Metrics Don't Match the Infrastructure

A company claims 50,000 daily active users but runs on a single £20/month server with no caching layer and no CDN. Either the usage numbers are inflated, or the infrastructure is about to collapse. Both are bad.

What to ask: "Walk me through your infrastructure costs over the last 12 months. How have they correlated with user growth?" Healthy startups show infrastructure costs that grow with usage -- not flat costs with hockey-stick user claims.

The Roadmap Requires Magic

The pitch deck shows an ambitious 18-month roadmap. The current team is three developers. The roadmap requires machine learning, real-time data processing, mobile apps, and an API platform. The team has experience in none of these areas.

What to ask: "Which features on your roadmap can your current team build, and which require hiring specialists?" Founders who have thought this through will give you a clear hiring plan. Those who haven't will say "we'll figure it out."

Nobody Can Explain the Architecture

You ask how the system works. The founder defers to the CTO. The CTO gives an answer full of buzzwords but light on substance. You ask a follow-up question and get a different answer from the one before.

What to ask: "Draw me the architecture on a whiteboard, right now." No preparation, no slides. A team that truly understands their system can sketch it from memory. A team that doesn't will fumble, contradict themselves, or produce something that looks nothing like their polished diagrams.

The "We'll Fix It After the Raise" Mentality

Every question about technical debt, security gaps, or missing processes gets the same answer: "That's on our post-funding roadmap." This suggests the team sees investment as a solution to engineering discipline problems. It is not. Money does not fix bad engineering habits -- it usually makes them worse by adding more people to a broken process. This is the core of the Series A technical debt trap.

What to ask: "What technical improvements have you made in the last 3 months that weren't directly tied to a feature?" Good engineering teams continuously improve their foundation. Teams that only build features are accumulating invisible risk.

4 Mistakes Investors Make During Tech DD

1. Obsessing over the tech stack

"They use React and Node.js" tells you almost nothing useful. A mediocre team using fashionable technology will produce worse results than a brilliant team using "boring" technology. The stack matters far less than the team's ability to execute with it. Stop asking "what do you use?" and start asking "why did you choose it and what trade-offs did you accept?"

2. Confusing complexity with sophistication

Microservices, Kubernetes, event-driven architecture -- these are powerful tools for the right problems. For a pre-Series A startup with 5,000 users, they are often premature complexity that slows development and increases operational burden. Simple systems that work are better than complex systems that occasionally work. Be suspicious of over-engineered infrastructure at early stages. Our build vs buy framework is a useful lens for evaluating whether a startup's technology choices are proportionate to their stage.

3. Evaluating the technology without evaluating the team

Code is a snapshot. The team is the trajectory. A codebase can be refactored, re-architected, or even rewritten. But a team that lacks the skills, culture, or discipline to build quality software will not improve just because you've given them money. Ask about hiring plans, development process, and how they handle disagreements about technical direction. Our guide on evaluating engineering teams covers the specific signals to look for.

4. Skipping DD because "it's still early"

Seed-stage technology can be messy. That is expected. But "early stage" is not a free pass for fundamental problems like no version control, no testing, no deployment process, or IP that belongs to a contractor. These issues become exponentially more expensive to fix as the company scales. A lightweight technical review at seed can save a painful discovery at Series A.

What You Should Actually Evaluate

Forget the tech stack. Focus on these four dimensions, which you can assess without writing a line of code yourself:

Engineering Velocity

How fast does the team ship? Ask for their deployment frequency, cycle time from idea to production, and how they prioritise work. A team that deploys weekly and iterates based on data is healthier than one that does big quarterly releases.

Ask: "How many times did you deploy to production last month?"

Technical Decision-Making

How does the team make and document technical decisions? Look for evidence of deliberate trade-offs rather than accidental architecture. The best teams can explain not just what they built, but what they chose not to build and why.

Ask: "Tell me about a technical decision you reversed."

Operational Maturity

What happens when things go wrong? Do they have monitoring? Alerting? An incident response process? A team that finds out about outages from customer complaints is not operationally mature, regardless of how clean their code is.

Ask: "When was your last outage and how did you find out?"

Team and Knowledge Distribution

Is knowledge shared across the team or concentrated in one person? Can multiple people explain how the core systems work? A bus factor of one is an investment risk, not a sign of genius.

Ask: "Who else besides the CTO can explain your data pipeline?"

When to Bring in a Fractional CPTO for Independent Assessment

Not every deal needs an independent technical review. But some absolutely do. Consider bringing in external expertise when:

+ The founding team is non-technical and you need someone to validate claims about the technology's capabilities
+ The deal size is significant and the cost of a technical review (typically £2,000 to £5,000) is trivial compared to the investment at risk
+ The product involves complex technology such as machine learning, real-time systems, or regulated data handling
+ You have had a bad experience before with a portfolio company's technology failing to scale post-investment
+ The startup's valuation is heavily driven by technology claims -- proprietary algorithms, data moats, or technical IP

A Fractional CPTO brings a particular advantage here over a pure technical reviewer. Because they evaluate both product strategy and engineering execution, they can tell you whether the technology serves the business model -- not just whether the code is clean. I have seen technically excellent products that were solving the wrong problem, and scrappy codebases that were perfectly aligned with a brilliant go-to-market strategy. The technology only matters in context.

The Bottom Line

Technical due diligence for investors is not about understanding every line of code. It is about asking the right questions, recognising the warning signs, and knowing when to bring in expert help.

The best technical DD focuses on people over technology, velocity over perfection, and honest trade-offs over polished presentations. A startup with messy code and a brilliant, self-aware team is a better bet than one with clean code and a team that cannot articulate where they are headed.

Invest in teams that understand their technology's strengths and limitations. Be wary of those who claim everything is fine. And when in doubt, spend the small amount it costs to get an independent assessment before writing the big cheque.

Need independent technical assessment?

I conduct independent technical due diligence for investors, evaluating both product strategy and engineering execution. Get the unvarnished truth before you write the cheque.

Book a Free Day Get in Touch

Frequently Asked Questions

How much technical knowledge do I need to evaluate a startup's technology?

Less than you think, but more than none. You don't need to read code, but you should be able to ask the right questions and interpret the answers. Focus on team capability, engineering velocity, and architecture decisions rather than specific technologies. For anything deeper, bring in an independent technical assessor.

When should I bring in a fractional CTO for technical due diligence?

Whenever the deal size justifies it and you lack in-house technical expertise. For investments above £250k, an independent technical review typically costs between £2,000 and £5,000 and can save you from a six-figure mistake. It is particularly valuable when the founding team is non-technical or when the product involves complex infrastructure.

What is the difference between a technical advisor and a fractional CPTO for due diligence?

A technical advisor typically reviews the code and architecture only. A fractional CPTO evaluates both the product strategy and the engineering execution, giving you a fuller picture of whether the technology serves the business goals. This dual lens is especially valuable for product-led growth companies.

How long should a proper technical due diligence take?

A thorough independent assessment takes 3 to 5 days. Anything less than a day is a surface-level review that will miss important issues. Anything more than two weeks suggests scope creep. The sweet spot is a focused week that covers architecture, team, process, security, and scalability.

What are the most common technical red flags investors miss?

Key-person dependency is the biggest one -- a brilliant solo developer who built everything is a risk, not an asset. Other commonly missed flags include outsourced core IP with unclear ownership, metrics that don't match the claimed user numbers, and a product roadmap that requires capabilities the current team doesn't have.

Mike Tempest

Fractional CPTO

Mike conducts independent technical due diligence for investors across the UK and Europe. As Head of Engineering, he scaled RefME from 0 to 2M users, and as CTO turned Risika profitable in 18 months. He brings both sides of the table -- the builder's perspective and the assessor's rigour -- to every engagement.

Learn more about Mike