Assessing Startups With Technical Due Diligence

In a post for On Startups, Karl Treier discusses several tips on how to be better prepared for selling or funding your startup with technical due diligence.

Treier says the primary purpose of the assessment is to evaluate four facets of your business from a technical standpoint, Vitality, Scalability, Maintainability and Continuity.

Vitality

When assessing the technical vitality of an organization, Treier says he’s looking to see first and foremost if the technical lead or founder is still excited about the business.

“Does he or she have a real vision of where to take the product next, are they a fountain of ideas,” he writes. “The truth is that great technical leadership also attracts great technical talent, which is essential to the vitality of the company.”

Maintainability

Maintainability, he says, is a favorite assessment topic of investors and buyers alike. Treier suggests using Joel Spolsky’s 12 point test, which includes questions like, ‘Do you use source/version control?’, ‘Do you build on check-in, daily, weekly, whenever?’ and ‘Does the software automatically notify you of errors?’

Continuity

Treier says this is typically the area where often the greatest weaknesses appear in the assessment, particularly with younger companies.

“Many of the questions should be aimed at ascertaining if the technical lead lives in a utopian world where nothing goes wrong or if they allow their utopia to be tainted by a touch of realism,” he writes.

Treier says the role of the assessor is to think on their feet and open up the questioning to explore avenues of weakness and strength.

For more on technical due diligence and assessing, read Treier’s full post here.

Related Content

Over at Open View, there are a lot of examples of startups passing the assessors tests and being funded such as Mashery, the Foreign Exchange Trading Social Network and Lucid Imagination. To find out if you’re a startup candidate, check out this article.