When a VC or PE firm runs technical due diligence on a target, they follow a repeatable playbook. Knowing it helps founders prepare — and helps investors brief their own process. Here’s how it actually works in 2026.
What investors are really assessing
Technical due diligence answers one question for an investor: does the technology support the investment thesis, and what are the risks to it? That breaks down into the durability of the product, the scalability of the architecture, the quality and ownership of the code, the security posture, and the strength of the team and processes behind it.
The typical process
- Document review — architecture, security policies, IP assignments, dependency lists, incident history from the data room.
- Management & engineering interviews — understanding decisions, roadmap and team capability.
- Codebase and architecture review — manual review of high-risk areas plus automated scanning.
- Infrastructure & security assessment — cloud configuration, access controls, data handling.
- Findings & risk report — issues ranked by severity and business/deal impact, with remediation cost.
Most mid-market processes complete in 30–90 days, depending on platform complexity and how well-prepared the seller’s data room is.
What moves the needle (and what kills deals)
Investors aren’t looking for a flawless codebase — they’re looking for understood, managed risk. The findings that damage or kill deals are consistent:
- Unassigned IP — code written by contractors who never signed assignment agreements.
- Key-person dependency — the platform depends on one or two irreplaceable people.
- Scalability ceilings — architecture that can’t support the growth case in the model.
- Security exposure the team can’t articulate or hasn’t planned for.
- AI/ML risk — unclear model provenance, training-data rights, or heavy third-party model dependencies.
How the AI layer changed diligence
In 2026, diligence increasingly scrutinises AI and machine-learning components: where models come from, what data trained them, the rights to that data, and operational and regulatory risk tied to AI-enabled features. If your product uses AI, expect it to be assessed as carefully as the core code.
Frequently asked questions
Who pays for technical due diligence?
Usually the investor or acquirer commissions it. Founders increasingly commission their own beforehand to be ready.
Can founders see the report?
It depends on the deal, but founders should always run their own assessment so they’re not blindsided by the buyer’s.
How do we prepare?
Resolve IP, document architecture and security, reduce key-person risk, and build a clean data room — ideally 60–90 days before the process starts.
Running diligence, or preparing to be assessed? See how our independent technical due diligence works or get in touch.