Technical Due Diligence Checklist: What to Review Before You Invest

A technical due diligence checklist helps investors test whether a software company's architecture, infrastructure, security, engineering team, codebase, IP, data controls and operating model can support the deal thesis. It turns technical due diligence questions into evidence requests, interview prompts and commercial risks before capital is committed.

The checklist should not be treated as a generic IT audit. In a transaction, every question needs to connect back to valuation, resilience, growth capacity, integration risk or the first 100 days after completion. A target can have a polished data room and still hide architectural constraints, weak access controls, dependency risk or team fragility.

FoundationState's technical due diligence service uses the same principle: scope first, review evidence, interview the right people, calibrate findings, then translate the technical picture into deal implications. The checklist below gives investors a practical way to structure that work before they invest.

How should investors use a technical due diligence checklist?

Use the checklist to decide what evidence is needed, which management claims need testing and which findings could affect deal value. It should guide the data room, interviews and readout, not become a mechanical box-ticking exercise.

In our diligence engagements we typically start with the investment thesis. If the plan depends on enterprise expansion, the checklist needs to test scalability, security expectations, support burden and roadmap feasibility. If the deal depends on margin improvement, cloud cost, operational efficiency and technical debt matter more. If the target is small, ownership, access and key-person dependency may be the material risks.

A useful software due diligence checklist should produce three outputs:

1. 1A focused document request list for architecture, infrastructure, security, engineering, code, IP, data and operational evidence.
2. 2A set of technical due diligence questions for founders, CTOs, engineering leads, security owners and product leadership.
3. 3A findings register that separates ordinary maturity gaps from issues that affect price, warranties, completion conditions or post-close investment.

FoundationState's guide to what technical due diligence is explains the full process. This article turns that process into practical investor questions.

What architecture and infrastructure questions should be reviewed?

Architecture and scalability determine whether the platform can support the growth story. Infrastructure and cloud questions test whether the estate is resilient, cost-aware and controlled enough to inherit.

• Architecture and scalability: Can management explain the main system components, data flows, integrations and scaling constraints in plain English?
• Architecture and scalability: Which parts of the platform are already under pressure, and what evidence shows where bottlenecks appear?
• Architecture and scalability: Does the architecture support the next stage of the investment plan, such as larger customers, higher usage, new markets or more complex integrations?
• Architecture and scalability: Are there single points of failure in the application, database, infrastructure or third-party dependency chain?
• Infrastructure and cloud: Who owns the cloud accounts, domains, DNS, certificates, hosting contracts and production access?
• Infrastructure and cloud: Are development, staging and production environments separated, or can one mistake affect customer-facing systems?
• Infrastructure and cloud: Are backups automated, monitored and restored in practice rather than only documented?
• Infrastructure and cloud: Is cloud spend visible by product, customer, environment or workload, and are there obvious inefficiencies that could affect gross margin?

The commercial question is not whether the architecture is elegant. It is whether the current design creates hidden cost, delivery drag, outage risk or an investment requirement that has not been priced into the deal.

What security and access questions belong in the checklist?

Security due diligence should establish whether the buyer is inheriting avoidable exposure. The UK National Cyber Security Centre's 10 Steps to Cyber Security is a useful baseline lens because it covers practical controls such as risk management, identity, malware protection, monitoring and incident management.

• Security and access: Is multi-factor authentication enforced for email, identity providers, source control, cloud consoles, finance tools and other privileged systems?
• Security and access: Are administrator accounts named, owned and reviewed, or are shared accounts still used for critical access?
• Security and access: Can the company show a joiner, mover and leaver process for employees, contractors and outsourced developers?
• Security and access: Are secrets, API keys and certificates stored in managed tooling rather than in source code, spreadsheets or personal accounts?
• Security and access: Has the company had security incidents, customer-impacting vulnerabilities or serious access failures, and how were they handled?
• Operational hygiene: Are monitoring, alerting, patching, endpoint protection and incident ownership clear enough for Day-1 control after completion?

This part of the technical DD checklist is often where small issues become commercial issues. Weak access control may create warranty questions. Unclear incident ownership may become a Day-1 readiness concern. Poor monitoring may mean the target cannot prove how resilient the platform really is.

What should you ask about engineering teams, process and code quality?

Engineering questions test whether the team can maintain and improve the platform after the transaction. Code questions test maintainability, dependency health and technical debt, but they should be proportionate to the deal.

• Engineering team and process: Who owns architecture, security, release decisions, infrastructure and incident response?
• Engineering team and process: Where is the company dependent on one founder, CTO, senior developer or outsourced supplier?
• Engineering team and process: How does work move from idea to release, and where do delays most often occur?
• Engineering team and process: Are delivery metrics, sprint artefacts, release notes or incident reviews available to support the management narrative?
• Code quality and technical debt: Is the repository structure understandable, with clear ownership of core services and modules?
• Code quality and technical debt: Are automated tests meaningful, maintained and run as part of the release process?
• Code quality and technical debt: Are dependencies current enough to avoid security, compatibility or recruitment problems?
• Code quality and technical debt: Are there areas the team avoids changing because they are too fragile, undocumented or poorly understood?

Investors should be careful not to over-index on style preferences. A code due diligence checklist is useful when it reveals delivery risk, security exposure or remediation cost. It is less useful when it turns into a subjective debate about engineering taste.

What IP, licensing, data and compliance checks matter?

IP, licensing, data and compliance issues often sit between legal, technical and operational diligence. The checklist should help the legal workstream ask sharper questions, while keeping the technical implications visible.

• IP and licensing: Are all repositories, deployment scripts, infrastructure definitions and production artefacts under company-controlled accounts?
• IP and licensing: Do contractor agreements, assignment records and repository history support the claim that the company owns the software?
• IP and licensing: Is open source dependency use tracked, and are any copyleft or commercial licence obligations visible to legal counsel?
• Data and compliance: What personal data, customer data and sensitive operational data does the platform process?
• Data and compliance: Where is data stored, replicated, backed up and deleted, and does this match customer and regulatory expectations?
• Data and compliance: Are access logs, audit trails and retention controls available for material systems?
• Operational hygiene: Are key policies, runbooks, architecture notes, support procedures and supplier records current enough for a buyer to operate the estate?

The output should be a clear view of what is owned, what is outsourced, what is licensed and what must be remediated before or after completion.

How does the checklist change by deal size?

The same technical due diligence template should not be applied to every deal. Scope should scale with investment size, platform complexity, data sensitivity and the buyer's intended ownership plan.

1. 1Small tier, usually one to two weeks: Focus on ownership, identity and access, workforce tooling, public digital footprint, basic security hygiene, critical suppliers and obvious Day-1 risks. This suits seed to Series A investments, smaller acquisitions and early technology assessments.
2. 2Medium tier, usually two to three weeks: Add SaaS product overview, architecture, hosting, application security posture, vendor dependency, engineering process, delivery maturity and operational resilience. This suits growth-stage companies and mid-market acquisitions where platform risk can affect value creation.
3. 3Large tier, usually three to eight weeks: Extend into detailed architecture, multi-environment infrastructure, engineering and codebase overview, security model, data and compliance exposure, reliability, integration or carve-out risk, team structure and post-acquisition investment planning.

The point is proportionality. A startup technical due diligence checklist should not demand enterprise evidence the company could not reasonably have. A large private equity transaction should not rely on a light-touch questionnaire when the buyer is inheriting multi-product complexity.

What documents should go in the data room?

A technical due diligence document request list should be precise enough to avoid slowing the deal. Asking for everything creates noise; asking for the right evidence lets reviewers test the main risks quickly.

• Architecture: Current architecture diagrams, integration maps, data-flow notes, system ownership records and known scalability constraints.
• Infrastructure: Cloud account structure, hosting contracts, environment list, backup records, disaster recovery notes, monitoring coverage and recent incident records.
• Security: Access-control policy, MFA coverage, privileged access list, security tooling, vulnerability records, incident history and supplier security evidence.
• Engineering: Organisation chart, release process, delivery metrics, roadmap dependencies, sprint or planning artefacts and key-person risk notes.
• Code and dependencies: Repository list, technology stack, dependency records, test coverage signals, CI/CD configuration and technical debt register if one exists.
• IP and data: Contractor records, open source inventory, data processing overview, retention and deletion evidence, audit logs and customer security requirements.

FoundationState's work with Finex Advisory is an example of making the review practical: focus on the areas most likely to affect operational confidence, security posture and growth, then turn findings into a clear improvement sequence.

Get an independent view before a technology checklist becomes a transaction surprise. Contact FoundationState to discuss technical due diligence scope, document requests and the questions that matter for your next investment or acquisition.

Frequently Asked Questions

What should a technical due diligence checklist include?

A technical due diligence checklist should include architecture and scalability, cloud infrastructure, security and access, engineering team and process, code quality, technical debt, IP ownership, open source licensing, data controls and operational hygiene. Each item should be framed as an investor question and linked to commercial risk, not just technical completeness.

What documents are requested in technical due diligence?

Common document requests include architecture diagrams, cloud and hosting records, security policies, access lists, incident logs, repository information, dependency records, release process evidence, delivery metrics, data-flow notes, open source inventories and contractor or IP assignment records. The exact list should be scoped to deal size, access constraints and the investment thesis.

What are the biggest red flags in technical due diligence?

The biggest red flags are usually weak ownership, unmanaged privileged access, missing backups, key-person dependency, undocumented architecture, fragile deployment processes, stale dependencies, unclear IP ownership, poor incident evidence and roadmap claims the platform cannot support. A single issue may be manageable; clusters of related issues often indicate deeper operating risk.