I have carried out technical due diligence exercises for venture capital firms, private equity firms, private companies and angel investors including Warburg Pincus, Matrix Partners, Atlas Ventures, Accel, DFJ Esprit, and others.  See below for a few examples.

I realise there are a number of competing forces in evaluating a technology asset.

  1. BulletSpeed
    Term sheets already on the table?  First mover advantage? Time to market critical? - it is vital that technical due diligence does not hold up the process

  2. BulletRisk
    There may be unpleasant surprises hidden in the technology, the organisation and its sourcing strategy, or development practices used - you need to protect yourself against one of these having a material affect on your returns

  3. BulletPeople
    Having your work torn apart by an external stranger who has not had to live through the development process is difficult.  - I am acutely aware that the team has to function effectively after the due diligence exercise, and I respect this.  You need to make sure the exercise does not adversely affect the morale of the team.

Ideally suited to small and medium sized technology assets, I will not spend weeks developing detailed metrics about the code, produce graphs and lengthy detailed reports, interrogating suspects and acting like an investigative journalist.  I will cut to the chase quickly, however I will win the respect of the team (because I have been there myself and it shows), hunt down the high-risk areas of the technology and give them a thorough shake-down.

As a result, you get an informed view in a concise report, quickly and incisively without fuss and without risk of the team rebelling.  And you don’t have to pay for a lengthy intrusive forensic-style examination.

Some examples of my work are:

A Venture Capital investment

A VC was looking to lead a B round in a startup with two products in the content management space.  I spent a day doing a health-check with the two product teams reporting one very good product and one with serious reservations on architecture and code quality.  The investor declined on the basis of my findings, and the startup attracted investment from another source.  Within a year, the product I had warned about was withdrawn due to severe quality problems and had to be completely rewritten at significant expense requiring a further capital round.  Despite failing the investment round on the strength of my report, the CFO of the startup has recommended me to other investors requiring technical due diligence.

Private equity investment

As part of a growth initiative an investment bank was interested in funding a spin-off from one of their portfolio companies in the insurance services space.  I was engaged to spend a couple of days with the CFO, development manager and design team to determine whether the technology was fit for purpose as a product and whether the team could support it going forward.  My report revealed a well designed and constructed piece of core software with an immature product team (the technology had been built as a commission through an external software house).  The company could prepare a business plan with confidence that the software was sound, but required the building of a product team around it during the early years of its spin-off, with the attendant challenges of building a team around “someone else’s product”.

A private company

A company with dozens of mature products and services in the telecoms space was considering re-launching one of their products in the data integration space.  I spent a day with the line of business executive, product manager and product architect developing and challenging their plan for product development, positioning and launch.  As a result, the company decided to modify its approach and eventually elected not to reposition the product.  A year after this exercise, lead by IBM and Oracle the fragmented data integration space consolidated and would have left my client competing with one of their strategic suppliers with a minority product had they gone ahead with their original plan.

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