"The term sheet came through. We had six weeks to close."
Last quarter, a Sydney SaaS founder came to us three weeks before her due diligence window opened. She'd been building toward her Series A for eight months. Traction was strong. The lead investor had signed the term sheet. Then the due diligence request arrived — and buried in it was a line she hadn't expected: "Technical audit to be conducted by [firm name], commencing Monday."
She'd never cleaned up the MVP codebase. The contractor who built half the backend had left without signing an IP assignment agreement. There were API keys committed to the git history from two years ago. And nobody had written a test since the seed round.
Three weeks of emergency cleanup. The deal repriced — $350K knocked off the valuation due to technical risk adjustments. It closed, but not on the terms she'd been working toward.
This is not an unusual story. I've seen it play out at least six times in the last two years alone. And it's almost always preventable.
What Technical Due Diligence Actually Covers
Here's what founders usually assume: due diligence is about whether the product works. It's not. Technical due diligence is about whether the business underneath the product is investable. That's a very different question.
When an investor commissions a technical review, their consultant is looking at seven areas:
- Code quality and architecture — Is this codebase maintainable? Can a new engineer get productive on it?
- Security and data protection — Is customer data safe? Are there unresolved vulnerabilities? Are credentials properly managed?
- Scalability — Does this architecture support 10x growth, or will it fall over at 2x?
- Technical debt — How much has accumulated, and does the team know about it?
- Development practices — Version control, testing, CI/CD, deployment processes.
- Intellectual property — Does the company own the code it operates? Are open-source licenses compliant?
- Team and knowledge distribution — What happens if your lead engineer leaves next week?
The real cost of a failed technical review: Deal repricing typically reduces valuations by 5–20% when significant issues are found. On a $5M Series A, that's $250K–$1M in effective dilution — for problems that are almost entirely preventable.
Heading Into a Series A? Let's Look at Your Technical Readiness First.
We run technical readiness assessments for founders before they go to market. You'll know exactly what an investor's consultant will find — before they find it.
Get a Technical Readiness Assessment →The Issues That Most Commonly Tank Deals
I've reviewed enough pre-fundraise codebases to know which issues surface every time. Here are the ones that hurt the most:
Hardcoded credentials in git history
This is the most common critical finding, and it's almost always the most embarrassing. API keys, database passwords, AWS access credentials — committed to the repository two years ago, "deleted" in a later commit, but still completely accessible in the git history.
When a technical consultant runs a secrets scan on the full git history and finds live production credentials, the deal stops. Everything else becomes secondary until those credentials are rotated and the finding is documented.
Missing IP assignment agreements
This one is purely legal, but technical reviewers check for it because it affects the investability of the IP. Every engineer, contractor, and consultant who wrote production code needs to have signed an IP assignment agreement. Early-stage companies routinely miss this for their first few contractors.
The fix is straightforward if you catch it early — a lawyer can draft the right agreements. The problem is it takes time, and due diligence timelines don't wait.
No automated tests on critical paths
Zero test coverage on payment flows, authentication, or core data operations tells investors that the team cannot safely make changes to the most important parts of the product. That directly translates to slower post-investment development velocity.
Bus factor of 1
When interviews and code review reveal that a single engineer understands the entire system — and there's no documentation, minimal commit history context, and no knowledge distribution — investors are effectively being asked to accept key-person concentration risk on their technical investment.
Most common findings by deal impact: Security issues (credentials, vulnerabilities) → highest deal impact. IP ownership gaps → deal-blocking. Technical debt without a plan → repricing. Bus factor of 1 → conditions added.
Don't Let an Investor Find It First
A technical readiness assessment finds the same issues an investor's consultant would find — but on your timeline, not theirs. We prioritise what to fix, what to document, and what to explain.
Talk to Us About Preparation →30 minutes • No obligation • Honest feedback
What We Actually Do When We Prepare Founders for Due Diligence
When I work with a founder heading into a Series A, the first thing we do is run the same audit an investor's consultant would run. Not to frighten you — to give you the honest picture of your current exposure before someone with financial leverage over your deal has it.
Here's the engagement:
Week 1: Technical audit. We review the full codebase, run security scans against your git history, audit your dependency tree for critical vulnerabilities and license conflicts, and review your infrastructure setup. We also check IP agreements and flag any gaps.
Week 2: Prioritised remediation plan. We don't hand you a 47-page report and wish you luck. We give you a prioritised list: fix these now (deal-blocking), document these (manage investor expectations), and here's your 6-month roadmap for the rest.
Weeks 3–6 (optional): Remediation support. For founders who want hands-on help fixing the critical issues, we can work directly with the development team to get it done — secrets remediation, dependency updates, CI/CD implementation, documentation.
The assessment itself costs $8K–$12K depending on codebase size and complexity. Remediation support is priced based on scope. Most founders who go through the process close their rounds faster and with better terms than they would have otherwise.
The Right Time to Think About This Is Before the Term Sheet
By the time you receive a term sheet, you have 4–6 weeks to due diligence close. That is not enough time to fix critical security issues, secure missing IP agreements, establish a CI/CD pipeline, and write the documentation a reviewer expects to see.
The right window is 90–120 days before you intend to go to market. That gives you time to audit, prioritise, remediate, and document — without the pressure of an open term sheet hanging over every decision.
Sound familiar? The founder I mentioned at the start of this article? She came to us three weeks before due diligence started. We got the critical issues resolved, but there wasn't time to build the test coverage or implement a proper CI/CD pipeline. Those gaps stayed in the report, and the investor priced them.
If she'd come to us 90 days earlier, the outcome would have been different.
Get Investor-Ready Before You Start the Process
We help Australian founders prepare their technical foundations before going to market. You'll know your exposure, fix what matters, and walk into due diligence with confidence — not surprises.
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