Day 1-2: Baseline and Owners
Assign owners per area; capture current SLOs, incidents, access model, SBOM, and runtime matrix
- Owner map and risk register
- SLO and runtime/EOL snapshot
technology-strategy15 min read
Common Technical Issues That Kill Funding Deals
A practical guide to the failure modes that derail technical due diligence—what investors see, why it matters, how to triage in two weeks, and how to fix in 30-90 days. Includes severity/impact matrix, proof pack checklist, and responsible AI governance expectations.
By Technology Strategy Team
Summary
Most deals fail on avoidable technical issues: missing security controls, weak reliability evidence, unproven scalability, data/PII risks, and undocumented processes. This guide shows what investors look for, the red flags that trigger price chips or pauses, and exactly how to triage in two weeks—followed by durable 30-90 day fixes.
Top Deal-Killing Issues
| Area | Symptom | Why It Kills Deals | Quick Triage (7-14d) | Durable Fix (30-90d) |
|---|---|---|---|---|
| Security | Secrets in code; unresolved critical CVEs | Immediate breach risk; weak SDLC | Secrets sweep; rotate keys; patch top CVEs; enable scanners | Centralized secrets; policy-as-code; CI gates; SBOM in CI |
| Access Control | Shared prod accounts; no MFA/SSO | No accountability; insider risk | Enable MFA; break glass accounts; audit admin actions | SSO/SCIM; least privilege RBAC; regular access reviews |
| Compliance/PII | Unknown PII flows; no DSAR tests | Regulatory and brand risk | PII inventory; stop external sharing; test DSAR flow | Data retention/residency; lineage; privacy by design |
| Runtime/EOL | Unsupported runtime/framework | Unfixable security; talent risk | Document EOL; scope upgrade; create rollback plan | Stage upgrade with contract tests and canaries |
| Reliability | No SLOs; noisy incidents | Unpredictable ops; hidden toil | Define SLOs; add golden signals; incident taxonomy | Error budgets; on-call runbooks; postmortem process |
| Delivery | No rollback; high change failure rate | Risky releases; slow recovery | Add feature flags; script rollback; small PR policy | Release trains; CI quality gates; deployment canaries |
| Data Gov/Backup | Backups untested; unclear lineage | Catastrophic loss potential | Run restore drill; document lineage snapshot | Automated backups; periodic restores; lineage in catalog |
| Scalability | No load tests; unknown headroom | Unbounded growth risk | Run baseline load test; track p95/p99; set budgets | Capacity model; autoscaling; perf regression gates |
| Observability | Sparse logs/metrics; no traces | Slow detection and MTTR | Enable request IDs; add golden signals; error sampling | Full tracing on critical paths; SLO dashboards |
| AI Governance | Prod PII to external LLMs; no evals | Privacy/compliance breach; model risk | Stop PII exposure; log usage; document policy | Private models/gateways; eval suites; red teaming; HITL |
| Vendor/Bus Risk | Single maintainer; opaque vendor | Concentration risk | Document dependency health; add mirrors | Multi-vendor strategy; support contracts; forks where needed |
Severity and Deal Impact Matrix
| Issue | Severity | Investor Reaction | Typical Outcome |
|---|---|---|---|
| Secrets in code + no rotation | Critical | Immediate risk memo | Deal pause or price chip until remediated |
| Unsupported runtime + no plan | High | Conditioned approval | Close contingent on upgrade gates |
| No SLOs + rising incidents | High | Ops risk premium | Valuation discount; require ops hires |
| No load test or capacity model | Medium-High | Scale skepticism | Reduced revenue projections |
| Unclear PII handling | High | Compliance counsel involved | Demand policies and evidence before close |
| No rollback; high CFR | Medium-High | Delivery risk | Milestone-based funding or delay |
| AI usage without policy/evals | Medium-High | Governance risk | Add governance gate or scope limits |
Two-Week Triage Plan
Stabilize risk and produce investor-ready evidence in 10-14 days
Day 3-5: Security and Access
Secrets sweep and rotation, patch top CVEs, enable MFA/SSO; export SBOM and scanner reports
- Secrets rotation report
- Scanner evidence (before/after)
Day 6-7: Reliability and Delivery
Define SLOs and golden signals; add feature flags and rollback scripts; reduce change batch size
- SLO dashboards and runbooks
- Rollback/feature flag proof
Day 8-9: Data and Compliance
PII inventory and DSAR test; run backup restore drill; draft data retention/residency summary
- DSAR test evidence
- Restore drill report
Day 10-11: Scalability Check
Baseline load test on golden paths; document capacity headroom and tail latencies with budgets
- Load test report
- Capacity/cost guardrails
Day 12-14: Readout and Plan
Bundle evidence; create 30/60/90 plan with gates; schedule weekly updates with investors
- Investor proof pack
- 30/60/90 remediation plan
Investor Proof Pack
- Architecture diagrams with dependency map and environment topology
- Security: SBOM, latest scanner reports, access model (SSO/MFA), secrets audit and rotation evidence
- Compliance: PII inventory, retention/residency policy, DSAR test evidence, vendor DPAs
- Reliability: SLO targets vs actuals, incident retros, error budget burn
- Delivery: DORA metrics, release calendar, feature flag and rollback runbooks
- Scalability: Load test report, capacity model, and cost-per-transaction guardrails
- Data: Backup/restore report, lineage snapshot, data quality checks
- AI governance: model inventory, eval results, usage policy, red-team notes, usage logs
- Risk register with owners and decision gates; 30/60/90 remediation plan
Where AI Helps (Safely)
Security and Dependency Summaries
Turn SBOM and scanner output into prioritized remediation lists
- Faster risk reduction
- Clear investor evidence
- Lower toil for engineers
Test and Runbook Drafting
Generate candidate unit/contract tests and operational runbooks from logs and specs
- Higher coverage faster
- Repeatable operations
- Quicker MTTR
PII and Data Mapping
Suggest sensitive fields and lineage gaps for human review
- Earlier compliance fixes
- Cleaner analytics/AI inputs
- Better audit readiness
Policy and Governance Drafts
Draft AI usage and access policies aligned to standards for human approval
- Consistent governance
- Faster documentation
- Reduced review cycles
Anti-Patterns to Fix Before Diligence
Big-Bang Fixes
Major changes with no rollback or interim evidence
- Creates new risks
- No progress visibility
- Investor skepticism
Hand-Waving Security
Vague promises without artifacts or owners
- Untrustworthy posture
- Due diligence delays
- Valuation impact
Over-Promising Scalability
Claims without repeatable load tests or capacity models
- Growth skepticism
- Reduced projections
- Funding conditions
Shipping During Freeze
Making changes during diligence to impress investors
- Creates incidents
- Demonstrates poor judgment
- Erodes trust
AI Code as Authority
Treating AI-generated code/policy as authoritative without review
- Quality risks
- Security vulnerabilities
- Governance gaps
Hiding Technical Debt
Concealing EOL or debt instead of presenting gated plans
- Discovery damages credibility
- Investor concerns multiply
- Deal complexity increases
Prerequisites
- Owners assigned for security, compliance, reliability, delivery, data, scalability, and AI governance
- Access to observability dashboards, CI/CD, scanner outputs, and non-production environments
- Documented change management with feature flags and rollback procedures
- Agreement on SLOs and freeze calendar during diligence period
References & Sources
- NIST Secure Software Development Framework— Comprehensive security guidelines for software development and due diligence
- OWASP Application Security Verification Standard— Security verification standards for application security assessments
- Google SRE: Four Golden Signals— Reliability monitoring and SLO best practices for technical due diligence
- NIST AI Risk Management Framework— AI governance and risk management guidelines for investor readiness
- SOC 2 Trust Services Criteria— Compliance framework requirements for security, availability, and confidentiality
Related Articles
When Startups Need External Technical Guidance
Clear triggers, models, and ROI for bringing in external guidance—augmented responsibly with AI
Read more →Technology Stack Upgrade Planning and Risks
Ship safer upgrades—predict risk, tighten tests, stage rollouts, and use AI where it helps
Read more →Technology Stack Evaluation: Framework for Decisions
A clear criteria-and-evidence framework to choose and evolve your stack—now with AI readiness and TCO modeling
Read more →Technology Risk Assessment for Investment Decisions
Make risks quantifiable and investable—evidence, scoring, mitigations, and decision gates
Read more →Technology Due Diligence for Funding Rounds
Pass tech diligence with confidence—evidence, not anecdotes
Read more →Be Diligence-Ready in 30-60 Days
Get a gap analysis and a prioritized remediation plan with a ready-to-use data room index, scalability proofs, and AI governance guardrails.