A tech due diligence (DD) is an evaluation of a startup's technology, leadership, team, and organization. It identifies assets and risks for investors. The document outlines how to prepare for a DD by addressing issues proactively, setting expectations, and staying organized. It recommends documenting architecture, identifying anti-patterns, and discussing skeletons in the closet with a mentor in preparation. A DD should find the right balance between transparency and reassurance.

1. How to survive a
Tech Due Diligence
by Chris Philipps

2. • Co-Founder / MD at PHILIPPS & BYRNE
• Tech advisory for startups and VCs
specialising in Tech Due Diligence
• 20 years in Tech
• Interim CTO
• 120+ Tech DDs / health checks,
150+ startups worldwide
Chris Philipps

3. Clients (excerpt):

4. Chris Philipps
Trans* Leadership
• In my first CTO position I didn’t
have a clue what a Tech DD was
and what I had to do
Tech Due what?

5. Chris Philipps
Trans* Leadership
• In my first CTO position I didn’t
have a clue what a Tech DD was
and what I had to do
Tech Due what?

6. • Huge stress point for many CTOs
• “I have the constant fear that
something’s always near”
TechDD: Fear of the dark

7. • Part 0: Who are you?
• Part I: Talk
• The basics: What is a DD
• Different stages of funding
• The context
• Documentation
• A typical DD approach: Topics, questions,
participants
• Typical anti-patterns
• Your skeletons in the closet
• Part II: Q&A
Agenda

8. Who are you?

9. Let’s start with the basics!

10. • A DD is a general health check
• Identification of assets and risks
• Evaluation of
• Leadership
• Team and organisation
• Technology
What is a Tech DD?

11. It is probably the most thorough and
honest feedback you can ever get!
Bonus

12. It should be:
The first test for a trustful collaboration
between startup and investor
…ideally

13. It shouldn’t be:*
• hide-and-seek
• us against them
• a show
* Well, at least not entirely!

14. But let’s be realistic!
It is also an evaluation of how good you are.

15. The right balance
A good TechDD is about finding the right balance
between shining and addressing skeletons in the closet
Hopefully not your new investor ’s face in your first board meeting =>

16. The Problem:
• No standards for Tech DDs
• Every person or company has their
individual approach
• From a 45 min call to a 10 day
360° review

17. Different Stage - different kind of DD:
Stage: Seed / A A / B / C C / D
Biz Focus: Build Grow Expand and Mature
DD Focus: Potential
Scalability, ability to
adapt quickly
Maintainability,
Compliance
(IPO, Exit)

18. The actual Tech DD

19. The process
Intro Kick-off call
Documentation
screening
On-site
DD /
remote call
(Follow-up) Report

20. Intro / Kick-off:
It starts before it starts…
• Communication / responsiveness
• Reliability
• Structured documentation
• Scheduling / agenda

21. The context
• Business model, market, objectives,
strategy, …
• What Tech strategy does this require?

22. The context
• Your CEO / co-founder’s story….
• The investor’s expectations…

23. Exercise:
“We are a curated shopping subscription
business for women’s fashion. Every month,
we deliver a box with selected articles based
on the individual preferences of our customer.
The customer keeps whatever she likes and
sends the rest back.
We’ve tremendously grown since 2016 and will
grow further by factor 10 in the next 3 years.”
?

24. Documentation
• The basics (architecture etc) should be always there
as living documents
• The expected extent of documentation depends on
the business area and on the funding stage (and the
reviewer)
• If you need to prioritise: Focus on architecture!
(see resources at the end of the slides)

25. Architecture…

26. Typical Points of interest

27. Typical Points of interest
• Tech Leadership and team

28. Typical Points of interest
• Is the system…
• stable
• scalable
• maintainable

29. Typical Points of interest
• Are there any big risks? (“Red Flag DD”)

30. Typical Points of interest
• Do they keep what they promise?

31. Typical Topics
• Business view
• Product
• Leadership in Tech
• Development process
• Hosting
• Deployment
• Software architecture
• Quality Assurance
• Stakeholder collaboration
• Tech ecosystem and culture

32. Typical Questions
“What parts of your tech landscape keeps you
awake at night?”
“Which changes would you apply to your
current architecture
if you had to scale from now (transactions /
requests) 2x, 10x, 100x?”
“Can you explain the reasoning behind the
choice of XY?
Why didn’t you [make / buy] it?”
“Can you describe your role and responsibilities
as CTO?”

33. Who will be involved?
CEO / founder(s)
CTO
Head of Engineering
CPO
Head of Product
Product Owner(s)
Scrum Master(s)
Agile Coach
Project Manager(s)
Mobile Engineers
Software Engineer(s)
Operations Engineer
DevOps
QA
Test Engineer(s)
Security Engineer
Data / BI team
Selected stakeholders such as Customer Support, Marketing, Sales
Internal IT
DataScientist(s)
Architect(s)

34. How to prepare the team?
• Find the right balance between creating
awareness and reassurance
• Know who’s best at what
• Teach them how to address skeletons in the
closet

35. Typical Anti-Patterns
Wrong or “no” architecture for the
business context

36. Typical Anti-Patterns
No engineering best practices
(test automation, Clean Code, …)

37. Typical Anti-Patterns
“CTO” == Lead Developer

38. Typical Anti-Patterns
Tech highly underestimated
and under-equipped

39. Typical Anti-Patterns
Quick & Dirty prototypes as basis for growth

40. Typical Anti-Patterns
“Not invented here” (NIH) syndrome!

41. What if sh*t has hit the fan?

42. Skeletons in the closet
• Everybody has them!
• Address them (proactively)
• Share your ideas how to fix it
=> Don’t promise what you can’t keep!

43. Again:
See this as an exercise to fix your actual problems!

44. If it went really bad:
Come up with a mitigation plan - ASAP

45. What can you do to be well-prepared?

46. Get into the mindset!
• Awareness, focus, structure

47. Stay in shape!
• Define your own quality
standards and keep up with
them
• Define a threshold:
e.g. Six weeks max to get back
in shape for a Tech DD

48. Analogy with bug-fixing
• The later you fix bugs in a software
development life-cycle, the more
expensive they become
• Fix your Tech DD before it even
happens

49. Talk to your CEO / co-founder(s)

50. Talk to your CTO fellows

51. Get a mentor

52. Do a Tech DD “Dry-Run”
• Early “as if” feedback
• CTO preparation
• Usually 6 to 9 months ahead of a
bigger funding round
• A follow-up 4-6 weeks before DD

53. When do you want to know that you have a problem?
As soon as possible!

54. To wrap it up:

55. Set the right expectations
Address issues proactively
Come up with a plan (and mean it!)
Stay in shape
Check yourself
Get into the mindset

56. First Quick Check: TechDD Calculator (for early stage startups):
https://pointninecap.typeform.com/to/WaWXfc
Philipps & Byrne Blog on Tech DDs:
https://medium.com/@consciousness
4+1 architecture:
https://en.wikipedia.org/wiki/4%2B1_architectural_view_model
PDF on 4+1 Architecture view with examples:
https://www.cs.ubc.ca/~gregor/teaching/papers/4+1view-architecture.pdf
Video by Simon Brown on visualising architecture:
https://leanpub.com/visualising-software-architecture
Simon Brown’s C4 Model:
http://static.codingthearchitecture.com/c4.pdf
Arc42 Architecture:
https://arc42.org/overview/
Resources

57. Thank you!
PHILIPPS & BYRNE GmbH
Chris Philipps
Havelberger Str. 12
10559 Berlin
Germany
+49-171-6432002
chris@philipps-byrne.com
http://www.philipps-byrne.com
https://www.linkedin.com/in/chris-philipps-a523758/

58. Photos by
Jonas Friedrich
https://www.mcasiwakuni.marines.mil/News/Photos/igphoto/2001027626/
https://commons.wikimedia.org/wiki/File:Brown_Lemur_in_Andasibe.jpg
Petr Kratochvil https://www.publicdomainpictures.net/pt/view-image.php?image=8654&picture=pensamento-macaco,
https://upload.wikimedia.org/wikipedia/commons/6/67/Skeleton_of_Alouatta.jpg
https://www.pexels.com/photo/africa-monkey-monkeys-the-gambia-1128533/
https://www.flickr.com/photos/iceninejon/3622484460
David J slaterhttps://en.wikipedia.org/wiki/Wikipedia:Featured_picture_candidates/Monkey_selfie
https://pxhere.com/en/photo/1068323
https://www.nationalgeographic.com/animals/mammals/r/ring-tailed-lemur/
https://taronga.org.au/news/2018-11-30/ring-tailed-lemurs-named
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