Days 0–30: Baseline & Controls
Publish SLOs, enable scanning in CI, map PII/data flows, create incident/runbook templates, spin up dashboards for DORA/FinOps.
- SLOs and dashboards live
- Security scans enabled
- Data mapping completed
technology-strategy24 min read
Technology Due Diligence for Funding Rounds
A comprehensive, founder-friendly guide to prepare for technology due diligence across Seed to Series C+. Covers architecture, security/compliance, scalability, delivery processes, org design, AI governance, and unit economics—plus a ready-to-use data room index, metrics, and a 30/60/90 remediation plan.
By Technology Strategy Team
Summary
Investors fund evidence, not narratives. This guide shows you what sophisticated investors and technical advisors look for during diligence—how your architecture scales, how safe your data is, whether your team can deliver reliably, and how AI features are governed and costed. Use the data room index and checklists to be funding-ready in days, not months.
Why Technology Due Diligence Matters
| Diligence Gap | Business Impact | Risk Level | Financial Impact |
|---|---|---|---|
| Poor architecture scalability | Funding delays, valuation discounts, growth limitations | High | $500K-$2M in lost valuation |
| Security/compliance gaps | Deal delays, remediation costs, compliance failures | High | $300K-$1.2M in risk exposure |
| Unproven reliability | Investor confidence loss, operational risk, customer churn | High | $250K-$1M in operational costs |
| Weak AI governance | Quality issues, cost overruns, regulatory exposure | Medium | $200K-$800K in remediation costs |
| Poor unit economics | Valuation compression, growth skepticism, margin pressure | High | $400K-$1.6M in valuation impact |
| Team/organization risks | Execution uncertainty, key person dependency, talent gaps | Medium | $150K-$600K in operational risk |
Technology Due Diligence Framework
| Framework Component | Key Elements | Implementation Focus | Success Measures |
|---|---|---|---|
| Architecture & Scalability | System diagrams, service catalog, scalability plans, ADRs | Evidence of scale readiness, clear boundaries | Investor confidence, scalability validation |
| Security & Compliance | Policies, audits, vulnerability management, vendor risk | Risk-based controls, audit readiness | Compliance assurance, risk mitigation |
| Reliability & Observability | SLOs/SLAs, incident management, monitoring, runbooks | Proven reliability, operational maturity | SLO attainment, incident reduction |
| Data Management | PII handling, data maps, retention, backups, DR | Data protection, privacy compliance | Privacy assurance, data resilience |
| AI Governance | Evaluation suites, guardrails, cost controls, vendor optionality | Quality assurance, cost predictability | AI reliability, cost control |
| Delivery & Quality | DORA metrics, test strategy, release policies, CI/CD | Delivery predictability, quality assurance | Delivery performance, quality metrics |
| Org & Operations | Team topology, ownership, hiring plans, contractor management | Organizational health, execution capability | Team effectiveness, talent readiness |
| Financial Operations | Unit economics, cost dashboards, budgets, FinOps | Cost transparency, margin protection | Cost efficiency, budget adherence |
Funding-Ready Metrics (Track Weekly)
| Metric Category | Key Metrics | Target Goals | Measurement Frequency |
|---|---|---|---|
| Reliability | SLO attainment, change failure rate, MTTR | ≥ 99.9% SLO; CFR < 15%; MTTR < 1h | Weekly |
| Delivery | Lead time, deployment frequency, PR size | < 1 day median; daily/weekly deploys | Weekly |
| Quality | Flaky test rate, escaped defects | < 2% flake; downward P0/P1 trend | Weekly |
| Security | Critical vulns open >30 days, access review cadence | Zero past due; quarterly reviews | Monthly |
| AI Governance | Eval pass rate, hallucination rate, guardrail triggers | Pass ≥ target; hallucinations down | Weekly |
| Financial | Cost per transaction, budget variance | Stable/downward; variance < 10% | Monthly |
What Investors and Technical Advisors Assess
| Area | What They Look For | Evidence | Risk Level |
|---|---|---|---|
| Architecture & Scalability | Simplicity, modularity, clear boundaries; scale plan for 10× load | System diagrams, service catalog, SLOs, load tests | High |
| Reliability & Observability | Error budgets, incident hygiene, on-call sustainability | SLO/SLA docs, incident postmortems, dashboards | High |
| Security & Compliance | Risk-based controls, audits, least privilege, vendor risk | SOC2/ISO roadmap, policies, access reviews, pen tests | High |
| Data Management | PII handling, lineage, retention, backups, DR | Data map, DPIA/PIA, backup/restore drills | High |
| Delivery & Quality | Lead time, change failure rate, test health, SDLC controls | DORA metrics, test coverage, change policies | Medium |
| Org & Ownership | Team topology, ownership clarity, hiring plan, contractor risk | RACI, team maps, role descriptions, recruiting | Medium |
| AI Governance | Evaluation quality, cost controls, privacy, vendor optionality | Eval results, token budgets, prompt logs, model registry | Medium |
| Cost & TCO | Unit economics, FinOps maturity, right-sizing | Cost per transaction/inference, budgets, alerts | High |
Data Room Index (Copy-Paste Template)
| Folder | Contents | Owner | Priority |
|---|---|---|---|
| 00-Overview | System context diagram, product overview, architecture summary | CTO/Staff Eng | High |
| 01-Architecture | Service catalog, ADRs, dependency map, environment topology | Platform Eng | High |
| 02-Reliability | SLOs/SLA, error budgets, incident postmortems, on-call policy | SRE/Eng Mgr | High |
| 03-Security-Compliance | Policies, SOC2/ISO status, pen test, risk register, vendor list | Security Lead | High |
| 04-Data | Data map, DPIA/PIA, retention, backups, DR tests, data contracts | Data Lead | High |
| 05-Delivery-Quality | DORA metrics, CI/CD pipeline map, test coverage, release policy | DevEx Lead | Medium |
| 06-AI-Governance | Model registry, eval results, prompt logs, safety/guardrails | AI Lead | Medium |
| 07-Cost-FinOps | Unit economics, cost dashboards, budgets vs actuals, anomaly reports | FinOps/CTO | High |
| 08-Org | Team topology, RACI, headcount plan, contractor inventory | People/CTO | Medium |
| 09-Roadmap | OKRs, theme funding, risk log, dependency plan, decision log | CTO/PM | Medium |
Team Requirements and Roles
| Role | Time Commitment | Key Responsibilities | Critical Decisions |
|---|---|---|---|
| CTO/Technical Founder | 40-60% | Overall strategy, investor communication, final approval | Priority setting, resource allocation, risk acceptance |
| Security Lead | 50-70% | Security compliance, policy development, audit readiness | Control implementation, risk mitigation, compliance approach |
| Platform Lead | 40-60% | Architecture documentation, scalability evidence, SLO definition | Architecture decisions, scalability planning, SLO targets |
| Data Lead | 30-50% | Data governance, privacy compliance, backup/DR evidence | Data classification, retention policies, DR strategy |
| AI Lead | 30-50% | AI governance, evaluation frameworks, cost controls | Model selection, eval criteria, safety standards |
| Finance/Operations | 20-40% | Unit economics, cost analysis, budget validation | Cost modeling, budget approval, financial reporting |
| Engineering Managers | 30-50% | Team readiness, delivery metrics, quality assurance | Team allocation, process improvements, quality standards |
Cost Analysis and Budget Planning
| Cost Category | Seed Stage ($) | Series A ($$) | Series B+ ($$$) |
|---|---|---|---|
| Team Resources | $45K-$100K | $100K-$250K | $250K-$600K |
| Security & Compliance | $25K-$60K | $60K-$150K | $150K-$360K |
| Tools & Infrastructure | $15K-$35K | $35K-$85K | $85K-$200K |
| External Audits | $20K-$50K | $50K-$120K | $120K-$300K |
| Documentation & Training | $10K-$25K | $25K-$60K | $60K-$140K |
| Remediation Work | $30K-$70K | $70K-$175K | $175K-$420K |
| Total Budget Range | $145K-$340K | $340K-$840K | $840K-$2.02M |
30/60/90 Remediation Plan
From gaps to investor-grade readiness
Days 31–60: Evidence & Resilience
Close top vulns, fix flaky tests, run DR test, add feature flagging/canaries. Stand up AI eval suite and token budgets.
- Incident/DR reports
- AI eval results
- Quality improvements
Days 61–90: Documentation & Drills
Finalize data room docs, complete access review, do a mock diligence Q&A, and record decisions in a log.
- Complete data room
- Mock Q&A outcomes
- Decision log maintained
Architecture and Scalability: What to Show
Concise System Diagram
1–2 pages with domains, services, data stores, external vendors, and data flows. Label trust boundaries.
- Shared mental model
- Faster advisor review
- Surface risk hotspots
Service Catalog
List services with owners, SLAs/SLOs, runtime, languages, dependencies, and on-call group.
- Clear accountability
- Incident readiness
- Integration clarity
Scalability Plan
Bottleneck analysis, horizontal scale strategy, caching/edge, data partitioning, rate limiting.
- 10× readiness
- Cost awareness
- Predictable performance
ADRs and Decision Log
Short Architecture Decision Records and a log for reversibility and context.
- Future-proofing
- Onboarding speed
- Fewer re-litigated debates
Security, Privacy, and Compliance
| Control Area | Expectations | Evidence | Compliance Level |
|---|---|---|---|
| Identity & Access | SSO, MFA, least privilege, quarterly reviews | Access review logs, IAM policy examples | High |
| SDLC Security | SAST/DAST, dependency scanning, secret scanning, IaC policy | Pipeline config, scan reports, exceptions register | High |
| Data Protection | Encryption in transit/at rest, key rotation, PII minimization | KMS policies, data map, DPIA/PIA | High |
| Vulnerability Management | SLA by severity, patch process, CVE backlog control | Open/closed vuln trend, past-due=0 | Medium |
| Third-Party Risk | Vendor list, DPAs, SOC2/ISO reports, exit plans | Vendor registry, due diligence summaries | Medium |
| Compliance | SOC2/ISO roadmap, policies, audit readiness | Policy set, audit calendar, previous audits | High |
AI Governance: Safety, Cost, and Optionality
Evaluation Suite
Automated evaluations for accuracy, toxicity, bias, and drift. Treat pass rates as release criteria.
- Quality you can trust
- Regulatory readiness
- Comparable vendors
Guardrails & Logging
Prompt/response logging with PII policies, safety filters, red-teaming program.
- Incident traceability
- Safer outputs
- Auditability
Token Economics
Budgets per environment/feature, caching/short prompts, cost per successful task.
- Margin protection
- Spend predictability
- Scale confidence
Vendor Optionality
Abstracted model clients, eval parity, data portability, fallbacks.
- Negotiation leverage
- Resilience
- Faster innovation
Risk Management Framework
| Risk Category | Likelihood | Impact | Mitigation Strategy | Owner |
|---|---|---|---|---|
| Security Gaps | High | High | Regular audits, scanning, policy enforcement, access controls | Security Lead |
| Scalability Limitations | Medium | High | Load testing, capacity planning, architecture reviews | Platform Lead |
| Compliance Issues | Medium | High | Audit readiness, policy documentation, control implementation | CTO |
| AI Quality Problems | Medium | Medium | Evaluation suites, guardrails, monitoring, human review | AI Lead |
| Data Privacy Risks | High | High | Data mapping, retention policies, access controls, encryption | Data Lead |
| Team Capability Gaps | Medium | Medium | Training, hiring, documentation, knowledge sharing | Engineering Managers |
Common Red Flags (and Quick Fixes)
No SLOs or Incident Postmortems
Operational immaturity; hidden reliability risk that concerns investors
- Define top 3 SLOs
- Add lightweight postmortem template
- Build investor confidence
Secrets in Code Repos
Security breach risk; compliance issues that can delay funding
- Enable secret scanning
- Rotate exposed keys
- Enforce pre-commit hooks
Flaky Critical Tests
Unreliable releases; slow velocity that questions execution capability
- Quarantine top flakes
- Add flake budget and owner
- Improve release reliability
Unmapped PII Flows
Privacy/regulatory exposure that creates legal and compliance risk
- Create data map
- Add PII tags in schemas
- Update retention policies
AI Features Without Evals
Quality and cost unpredictability that worries growth-focused investors
- Add eval suite
- Implement guardrails
- Set token budget alerts
Single Points of Failure
Resilience and key-person risk that threatens business continuity
- Document runbooks
- Add redundancy
- Cross-train ownership
Prerequisites
- Baseline reliability, delivery, and security metrics (SLOs, DORA, vuln SLA)
- System diagrams, service catalog, and ownership maps
- Data classification and privacy posture (PII flows, retention, DR)
- AI evaluation, guardrails, and cost controls for any AI features
- Unit economics and cost dashboards with budget variance tracking
References & Sources
- Architecture Decision Records Guide— Framework for documenting important architecture decisions and their rationale
- DORA Research (Accelerate)— Research-based insights on technology delivery performance and practices
- NIST AI Risk Management Framework— Comprehensive framework for managing AI risks and ensuring responsible AI usage
- ISO/IEC 27001 - Information Security Management— International standard for information security management systems
- SOC 2 Trust Services Criteria— Framework for security, availability, processing integrity, confidentiality, and privacy
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