Technical Due Diligence for Indian Startups: How to Prepare for Series A
What technical due diligence involves for Indian startup fundraising, what investors look for, and how to prepare your technical documentation and codebase before Series A.
The term sheet is on the table. The investor likes the product, the team, and the traction. Now they want to do technical due diligence.
Most Indian startup founders at this stage have two reactions: relief that the business case cleared, and anxiety about what the technical review will find.
This guide explains exactly what happens during technical due diligence, what investors look for, what the common failure points are, and how to prepare before the investor’s technical team arrives.
What Technical Due Diligence Is
Technical due diligence (TDD) is an investor’s process for evaluating the quality, scalability, and risks of your technology before closing a funding round.
It is typically conducted by:
- The investor’s in-house technical partner or CTO
- An external technical consultant retained by the investor
- A technical advisory firm specializing in startup DD
The process takes one to three weeks and covers:
- Architecture review
- Code quality assessment
- Security and compliance
- Infrastructure and scalability
- Team and processes
- Intellectual property and ownership
TDD is not trying to find reasons not to invest. It is trying to accurately price the technical risk in the investment. Identified risks become negotiating points, not deal-breakers, in most cases.
What Investors Look For
1. Architecture and Scalability
Can your system handle 10x current load without significant rework?
Investors are not expecting perfection. Early-stage architecture debt is expected. What concerns them is architecture so fundamentally flawed that scaling would require a near-complete rewrite.
Common concerns:
- Monolith with no modularization (fine at early stage, flag at scale)
- Database with no indexing strategy (performance cliff as data grows)
- No caching layer (will collapse under load)
- Single points of failure with no redundancy
- No horizontal scaling capability
Mitigant: Have a clear technical roadmap that acknowledges current limitations and explains the path to addressing them. Acknowledging known technical debt is better than pretending it does not exist.
2. Code Quality
Is the codebase maintainable? Can new engineers become productive in reasonable time?
Investors look for:
- Consistent coding standards
- Adequate test coverage (30%+ is acceptable, 60%+ is good)
- Documentation (README, inline comments, API documentation)
- Version control practices (branching strategy, commit hygiene)
- Code review process
Common concerns: No tests, no documentation, no version control standards, all code written by one person with no comments.
3. Security
Are your customers’ data and your business assets protected appropriately?
The most common security issues in Indian startup codebases:
- Hardcoded credentials in code (API keys, database passwords in source code)
- No input validation (SQL injection, XSS vulnerabilities)
- Weak authentication (no MFA available, poor password policy)
- Sensitive data stored in plain text
- Unnecessary administrative access for all team members
A security breach post-investment is a serious problem for investors. Significant security vulnerabilities are genuine red flags, not just negotiating points.
4. Infrastructure and DevOps
How is your system deployed? How do you manage incidents? How do you update the product?
Signs of mature infrastructure:
- Automated deployment (CI/CD pipeline)
- Monitoring and alerting in place
- Backups tested and documented
- Disaster recovery plan exists
- Development, staging, and production environments separated
Signs of concern:
- Manual deployment (someone SSH-ing into a server to deploy)
- No monitoring (you find out about outages when customers complain)
- No backups or untested backups
- No staging environment (direct deployment to production)
5. Team and IP
Does the team own the code? Are there any contractor or third-party ownership issues?
Commonly uncovered in Indian startup TDD:
- Code written by a freelancer or development agency who retains ownership
- Open source licenses used in ways that require open-sourcing your code
- Third-party libraries with licensing conflicts
- Former co-founders or employees with potentially contested IP claims
Essential documents to have ready:
- IP assignment agreements from all employees and contractors
- Open source license audit
- Any prior company’s code that founders may have used (this is a serious concern for investors)
How to Prepare: A 60-Day TDD Readiness Plan
Month 1: Documentation and Security
Week 1 to 2: Architecture documentation
Create or update:
- System architecture diagram (how components connect and communicate)
- Database schema documentation
- API documentation (if you have external APIs)
- Data flow diagram (especially for any customer data)
If this documentation does not exist, create it now. Investors will ask for it. Not having it is a red flag.
Week 3 to 4: Security audit and remediation
Run a security scan. Tools:
- OWASP ZAP (free, good for web applications)
- Bandit (free, Python-specific security issues)
- Snyk (free tier, dependency vulnerabilities)
Fix all critical and high severity findings before the investor’s review. Medium and low findings should be documented with a remediation plan.
Check for hardcoded credentials immediately. Search your codebase for strings like “password,” “secret,” “api_key,” and “access_token.” Move all credentials to environment variables.
Month 2: Code Quality and Infrastructure
Week 5 to 6: Code quality improvements
Add tests to your most critical business logic if you have no tests. You do not need 100% coverage. You need enough tests to demonstrate that testing is a practice, not an afterthought.
Add docstrings and README updates for the components that external engineers will need to understand most.
Conduct one round of code review across your senior team. Document the review process (even a simple GitHub PR process is adequate).
Week 7 to 8: Infrastructure documentation
Document:
- Deployment process (step by step)
- Monitoring setup (what is monitored, how you are alerted)
- Backup process and recovery steps
- Production access control (who has access to what)
Set up basic monitoring if you do not have it. AWS CloudWatch, Google Cloud Monitoring, or Datadog all have free or low-cost tiers for basic alerting.
The TDD Process: What Happens Week by Week
Week 1 (Information gathering): The technical reviewer requests access to:
- GitHub or GitLab repository
- Architecture documentation
- Infrastructure access (read-only)
- Team availability for interviews
You should have everything ready before this request arrives.
Week 2 (Deep review): The reviewer reads code, tests infrastructure, runs security scans, and interviews technical team members.
Team interview questions typically include:
- “Walk me through how you handle a production incident”
- “What is your deployment process?”
- “What is your biggest technical challenge right now?”
- “How do you manage technical debt?”
Prepare honest, thoughtful answers. Reviewers are experienced and can tell when founders are performing rather than being genuine.
Week 3 (Report and discussion): The reviewer produces a technical assessment document with findings categorized by severity. This becomes the basis for a conversation about technical risk.
Most TDD findings fall into three categories:
- Must-fix before funding closes (critical security issues, IP problems)
- Should-fix within 90 days post-funding (architectural concerns, security improvements)
- Nice-to-have (code quality, additional monitoring)
Responding to TDD Findings
When the technical report comes back with issues, the right response is:
Acknowledge honestly. “Yes, we know the database indexing needs work. We have been prioritizing product velocity. With this funding, the first technical investment is addressing this.” This response is better than being defensive or claiming the finding is wrong.
Show your roadmap. Have a technical roadmap that addresses known issues. Even a simple 90-day plan showing what gets fixed first signals that you have thought about this.
Negotiate fairly. Some technical debt findings become valuation adjustments. If the TDD finds that significant technical rework is needed, the investor may lower the valuation or change the terms. This is legitimate negotiation, not a deal-breaker.
The Bigger Picture
Technical due diligence is stressful. But founders who prepare honestly do significantly better than those who try to paper over technical problems. Investors have seen hundreds of codebases. They know what typical startup technical debt looks like. Honesty paired with a clear improvement plan is more reassuring than a perfectly polished presentation of a system that does not exist.
At Startupbricks, our tech consulting service includes TDD preparation for Indian startups. We conduct a pre-TDD audit, identify and fix critical issues, and prepare the documentation that investors expect to see.
Book a free TDD preparation consultation and let us help you walk into investor technical review with confidence.