You’re a decent judge of character, otherwise you wouldn’t have made it long as an investor. You are also capable of grinding some serious research into your target and their competitive landscape. There’s just one piece missing from the total diligence picture, and that’s the ability to look under the hood.
Tech diligence gets a bad rap, often deservedly so. Investors can feel the audit won’t change their calculus, and they’re afraid of being off-putting to hot targets. But there’s a right way to approach Technical Due Diligence — one that actually builds a relationship with the product team instead of alienating them, and one that produces results that impact the investment decision at a base level.
We developed the Tech Audit service line for folks like you, who were looking for a cost-effective way to plug just this one missing piece into your diligence process. Over a 72 hr period, we will liaise with the target’s business and engineering principals, conduct code reviews, and interview technical talent at each level of the hierarchy. The goal is not to determine whether the code is “good or bad.” We’re here to add unique information to the investor picture.
1. Org analysis
A useful tech audit starts with a thorough understanding of where engineering fits into the organization, and what that organization’s goals are. After going through an org chart with the CEO, we meet with the CTO to understand their philosophy on hiring, managing, and driving results from smart creatives. We collaboratively build a schedule, picking the key individual collaborators to to interview and setting common-sense boundaries on code review. This process builds trust and reveals deeper learnings than the typical adversarial approach.
2. Code review
Tech DDs often frustrate target teams because the wrong talent is used. We don’t throw full stack generalists or junior talent at audits. All Brandt tech audits are executed by a CTO-quality engineer hand-picked for the tech stack they’ll be encountering. Code review encompasses .git contributions, server side setup, application development, and documentation. We meet with engineers from every stratum of the organization to learn about their experience at the company, and deduce useful data on recruiting and people development. We repeat the process in multiple silos to disambiguate our data and build a picture of what it’s like to develop software inside this organization.
Much of the value of any tech audit comes from placing it in the context of the goals of the organization (and the investor) rather than simply labeling the code “good” or “bad.” For example: is the CEO’s characterization of their technical talent correct? Is the CTO’s roadmap/timeline feasible given the condition of the code and current product team? If you invest, can new hires be made to accelerate development? Or would the code be impossible for outsiders to work on in the near term due to lack of proper commenting and documentation? Are the CEO’s par-for-the-course boasts about agile process and daily builds backed up by the git commit logs?
When you have the power to discover deep disconnects between your CEO and CTO early, when you have the ability to peer into the future of a team – when you have insights that even the CEO doesn’t have, you have started chipping away at the information asymmetry that always favors the founder and hurts the investor.
Jourdan has an old man’s wisdom alongside a young man’s energy. Though he is much younger, I often turn to Jourdan for the benefit of his clear thinking and his shockingly deep knowledge on many topics. I’m surrounded by smart people, but Jourdan is a singularity.
Mike Edelhardt, General Partner, Social Starts VC & Joyance Partners | $85M funds under mgmt
Jourdan and his team brought rigor to our diligence process. As a result of their work, we were able to make smart passes on a few initially tantalizing machine learning opportunities. We later contracted with Brandt & Co. to conduct product workshops with 2 portfolio companies, which were fruitful and well received.