Should investors pay for technical due diligence before an early-stage investment?

The economics are lopsided

An early-stage cheque is usually many times larger than the cost of a few days of expert review. If that review changes your decision or your terms even occasionally, it has paid for itself. If it confirms your view, you invest with more confidence and a clearer picture of what the company needs next.

The costly mistakes are rarely hidden in the pitch deck. They sit in the platform, the team and the gap between what the demo shows and what customers will rely on.

What a short review can tell you

• Whether the product works as demonstrated, and what sits behind the demo
• Whether the architecture can carry the growth in the plan, and roughly what changing it would cost
• Key-person risk: what happens if one engineer leaves
• The security and compliance gaps enterprise customers will find
• Whether cloud and vendor costs are growing faster than revenue
• Whether AI features are real, evaluated and dependable, or a demo

What it cannot tell you

A short review cannot predict the market, guarantee the team’s future performance or find every defect. A good report says what was checked, what was not, and how confident the reviewer is, so you can weigh it alongside everything else you know.

Seeing it from both sides of the table

I have pitched to the boards and investors of publicly listed companies since as early as 2009. I have also led Festicket’s technology through Series B and C funding, and Remo’s technology through acquisition by Events.com. I know what investors ask, what founders worry about, and what is easy to miss in a short process.

Technical due diligence for investors

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