At Kfund, we take technology very seriously as part of our internal investment analysis. Today, we want to share how we approach the process of assessing a project’s technological capabilities and its team from the ground up. Our goal is to explain our methodology, helping you prepare for this type of evaluation, whether with us or other funds.
The first key point to highlight is that each stage of a company’s development requires a different approach when evaluating its technological aspects. Nevertheless, as a family of funds investing between €100k to €10M in early stage startups, we adapt our tech due diligence to the phase (pre-seed to Series A), maturity and type of round of the projects we look into.
Pre-seed
It’s all about the founder(s). We typically don’t do any dedicated tech DD (mostly because, in many cases, there is little to nothing to audit), so we focus a lot on the background and expertise of the CTO (ideally one of the founders). The goal is to understand the CTO’s vision, sharpness, and potential ability. Not only to build the tech but also to assemble a well-balanced team in the coming months or years.
Seed / Early Series
It’s pretty much still all about the founder(s). Typically there’s already a tech team in place, but a little one. The goal is also to understand the vision and sharpness of the CTO, by focusing more on his ability to scale the stack, the team and how it interacts with other departments (product, sales, marketing).
Growth
Even though assessing the tech leadership is of course essential, there are more variables to take into consideration. At this stage, projects are usually far more mature. How well balanced is the team? How’s the relationship with some other VPs and/or Executives? What internal processes do they have in place? How hands on is still the CTO? How robust is the stack? How can we make sure tech scales and will not cause problems but help the business grow?
Within this context, as CTO of Kfund, I am the one leading the tech due diligence. Typically I tend to jump into the investment processes once it has passed the first filters. There are no real strict rules but I try to apply common sense in order to join when I think I can bring value, or when somebody else calls me in because he/she thinks the same.
Furthermore, I could say I participate often in pre-seed deals (joining the second or third call), most of the times in seed deals (sometimes joining also the second or third call, some other times having a dedicated call with the CTO), and almost every time in the Series A+ deals (having a dedicated call with the CTO).
Then, we could then say there are two different types of processes.
Having said that, let me share with you how we prepare, structure and run these sessions and extract conclusions. Here’s our tech due diligence guidebook.
This process typically takes around 30 min.
In order to be efficient during the call, we take some time beforehand to understand what the company whose CTO we are going to talk to is doing from a business and product perspective.
This implies taking a look at the deck, any sort of internal documentation we have already built within the context of the investment process and eventually (if there’s something specific to clarify and/or understand better) exchanging briefly with the partners / analysts who are leading the conversations and are more into the company.
It normally consists of just one call and it usually takes one hour (flexible), but in some (rare) cases it is required a second call (30 min) to clarify some doubts.
Personal Introductions
This should not take more than 5 min overall.
I let the CTO know a bit about my (tech/engineering) background, my experience as an entrepreneur and projects I’ve built and scaled, and my current role as CTO of Kfund. This creates a very good starting vibe because the CTOs then see me not as a bullshitter but as one of them. Which I believe it’s true, since I am. The goal is to create a warm atmosphere.
Then obviously it is interesting to understand the background and experience of the CTO, how he/she met his/her current partners, what was his/her motivation to jump into the project plus the evolution of his role over time.
At this stage, we are looking for someone with a good level of English, capable of communicating clearly and effectively. Strong communication skills are essential, as the role requires engaging with different stakeholders and conveying ideas with confidence. We also value self-assurance, as it helps in making decisions, handling challenges, and presenting ideas persuasively.
High level talk about company and product
Unless the company is doing something very special or the product is very complex, this section should be skipped. I try to come to the call with my homework done so we can be efficient and get straight to the following points.
I like to talk about the overall headcount and structure of the company. The goal is to understand the maturity and stage of the business and have some context about it in order to know whether the tech is evolving at the same pace (or not) as the rest of the departments.
A key challenge here is ensuring a high-level, full understanding of other departments—a requirement that is often overlooked. Surprisingly, it’s not uncommon for a CTO to have limited knowledge of what happens beyond the tech scope. However, cross-departmental awareness is essential for making informed decisions, aligning strategies, and fostering collaboration across teams. We expect candidates to break these silos, proactively engage with different areas of the business, and develop a holistic view that drives overall company success.
The objective is to get deeper into the tech and product teams. Understand the organigram, layers, departments, sub departments, (inter)relations, processes. Focus on the key members, intermediate managers (if existing), levels of seniority, different roles. To sum up, evaluate how (well) balanced the team is and how much behind or beyond it stands compared to other departments (sales, marketing…).
A crucial issue for those responsible for the technology area of a startup that is taking its first steps is assessing how the tech department compares to others—whether it is lagging behind or operating far ahead. Understanding this balance is key, as both scenarios can impact overall business alignment and efficiency. Additionally, it is essential to evaluate whether the tech team is under or over-resourced, as either situation could pose a risk to business growth. An under-resourced team may struggle to keep up with demands, while an over-resourced one could lead to inefficiencies and unnecessary costs. We expect candidates to critically analyze these dynamics and ensure the tech function is optimally structured to support sustainable growth.
Main goal is to not really evaluate what’s in place (what it is good or bad is very subjective, and most times the answer is “it depends” since what it can be good at a given stage can be not as good for later one) but assess the capacity of leadership and strategic thinking of the CTO and identify risks and challenges.
A core duty of the tech lead role is assessing how the company’s technology stack compares to industry standards—whether it relies on legacy systems or remains up to date with modern best practices. It is also essential to evaluate whether the technologies in place impact talent acquisition and retention, as outdated or unpopular tools can deter top candidates. Additionally, the chosen technologies must support product scalability at a reasonable cost. While they don’t always have to be the absolute best, they should at least avoid being a limiting factor to growth and efficiency. We expect candidates to critically analyze these aspects and ensure the tech strategy aligns with both business needs and industry trends.
And most important, understanding the matrix reliability / maintainability / cost.
The level of confidence and knowledge the CTO shows about these topics are among the most important points to tackle within this session.
Being closer to success in this area requires maintaining the right balance between scalability, cost, and reliability—an essential factor in sustaining business growth. Ensuring this area is fully covered with the right talent is critical to preventing constant distractions from operational tasks that could divert focus from more important strategic or even tactical developments. By having a well-structured team in place, the company can optimize resources, improve efficiency, and stay focused on long-term innovation and expansion.
In a very simple way, most products are ingested with some data (input), something is done with it (crunching) and then what’s produced (output) it’s somehow consumed.
From a risk point of view, it’s very important to identify data sources (first party, third party) and understand how this data is read and gets ingested into the system.
Then, about the data crunching
Finally, once the output is ready to be consumed,
The most significant challenges here are ensuring the reliability of multiple data sources while maintaining consistency and accuracy across them. Managing the maintainability and standardization of integrations is critical to avoiding technical debt and inefficiencies as the system evolves. Additionally, the technologies and services used for data crunching and mining must be carefully evaluated to strike the right balance between scalability and cost. Choosing the right tools and frameworks is essential to ensure that data operations remain efficient, cost-effective, and capable of supporting long-term business growth.
Depending on the project, some other topics might be worth discussing. I.e: AI, intellectual property, proprietary algorithms, third-party tools usage, partnerships, specific departments…
The goal is to try to understand the “secret sauce” and what makes the company unique in terms of core technology and defensibility.
This typically is the pending subject to most of the startups we evaluate, because it’s never a priority until the company becomes a late stage one or it’s simply too late. However, for some industries / products / types of clients it’s important to take security more seriously. The goal is to identify what actions have they taken (very rare), what they want to do and / or what’s their roadmap (more often) and most of the time provide them with some very high level shortcuts, tips and recommendations.
At this point, we expect a high level of knowledge about what needs to be done in the security field, along with a strong awareness of how it impacts business growth. Security is not just a technical necessity but a fundamental aspect of maintaining trust, compliance, and operational stability. Poor security decisions can lead to financial and reputational risks, while a well-structured approach can enhance resilience and enable sustainable growth. Ensuring the right measures are in place allows the business to scale confidently, protect its assets, and minimize vulnerabilities that could hinder long-term success.
One of the most important sections. Understand top 3 worries of the CTO (typically HR, team scalability, be able to keep up with sales / business) and evaluate what’s his / her strategy to tackle these points within the following 6 / 12 / 18 months.
It is essential to have a strong awareness of both individual and team weaknesses, recognizing areas that need improvement without hesitation. Self-confidence is crucial—not only to acknowledge these gaps but also to proactively develop a clear roadmap to address them in the short, medium, and long term. The ability to identify challenges, set realistic goals, and take decisive action ensures continuous growth and improvement.
I also try to be very honest and transparent and if there’s still time I challenge him about some aspects explained in the previous point which I find a bit immature, contradictory or somehow “weird”.
A strong sense of humbleness is essential, along with the ability to receive feedback without arrogance. True growth comes from being open to different perspectives, acknowledging that there is always room for improvement, and valuing input from others. A lack of arrogance fosters collaboration, strengthens team dynamics, and creates an environment where constructive feedback is seen as an opportunity rather than a threat. Embracing this mindset not only enhances personal and professional development but also contributes to a healthier, more effective work culture.
This process takes me around 15 min, but it’s the most difficult one.
I elaborate a battery of 6-8 very high level bullet points where I highlight (trying to be as objective as possible, but still very subjective) strengths, risks and challenges. Moreover, I also try to evaluate the company from a tech perspective. From this angle, it’s not about whether the tech is good or bad, but if its tech stands behind, runs at the same pace or it’s beyond the business. In my opinion, understanding this aspect is key to evaluate if the technology is enhancing or putting obstacles to the business growth.
Then this information is shared with the rest of the team and included into the internal analysis document. Often, (some of) these points are tackled into the Investment Committee and if needed we go in detail into some of the risks and challenges.
Technology is normally a key factor to determine whether to invest or not in a company. We could affirm that the vast majority of disruptive projects (startups) who are likely to be invested by VC funds are either very tech-oriented (enabling technologies) or the technology is a boost for internal productivity and efficiency. In any case, in-house technology brings defensibility and makes a company more unique.
Furthermore, having a proper and deeper understanding of the technology behind a project / product becomes essential to:
Voilà, c’est ça. This is the trade off I found to maximize the (tech) knowledge I can grasp and minimize the time spent needed to evaluate a project. If you’ve made it this far, you’ve earned a little something! Grab the deck with all the key info from this post right here.
I hope this helps!
PS: @CEOs Please. Leave. Your. CTO. Alone. And. Independent. And. Trust. Him/Her. Thank. You. ;-)
At Kfund, we take technology very seriously as part of our internal investment analysis. Today, we want to share how we approach the process of assessing a project’s technological capabilities and its team from the ground up. Our goal is to explain our methodology, helping you prepare for this type of evaluation, whether with us or other funds.
The first key point to highlight is that each stage of a company’s development requires a different approach when evaluating its technological aspects. Nevertheless, as a family of funds investing between €100k to €10M in early stage startups, we adapt our tech due diligence to the phase (pre-seed to Series A), maturity and type of round of the projects we look into.
Pre-seed
It’s all about the founder(s). We typically don’t do any dedicated tech DD (mostly because, in many cases, there is little to nothing to audit), so we focus a lot on the background and expertise of the CTO (ideally one of the founders). The goal is to understand the CTO’s vision, sharpness, and potential ability. Not only to build the tech but also to assemble a well-balanced team in the coming months or years.
Seed / Early Series
It’s pretty much still all about the founder(s). Typically there’s already a tech team in place, but a little one. The goal is also to understand the vision and sharpness of the CTO, by focusing more on his ability to scale the stack, the team and how it interacts with other departments (product, sales, marketing).
Growth
Even though assessing the tech leadership is of course essential, there are more variables to take into consideration. At this stage, projects are usually far more mature. How well balanced is the team? How’s the relationship with some other VPs and/or Executives? What internal processes do they have in place? How hands on is still the CTO? How robust is the stack? How can we make sure tech scales and will not cause problems but help the business grow?
Within this context, as CTO of Kfund, I am the one leading the tech due diligence. Typically I tend to jump into the investment processes once it has passed the first filters. There are no real strict rules but I try to apply common sense in order to join when I think I can bring value, or when somebody else calls me in because he/she thinks the same.
Furthermore, I could say I participate often in pre-seed deals (joining the second or third call), most of the times in seed deals (sometimes joining also the second or third call, some other times having a dedicated call with the CTO), and almost every time in the Series A+ deals (having a dedicated call with the CTO).
Then, we could then say there are two different types of processes.
Having said that, let me share with you how we prepare, structure and run these sessions and extract conclusions. Here’s our tech due diligence guidebook.
This process typically takes around 30 min.
In order to be efficient during the call, we take some time beforehand to understand what the company whose CTO we are going to talk to is doing from a business and product perspective.
This implies taking a look at the deck, any sort of internal documentation we have already built within the context of the investment process and eventually (if there’s something specific to clarify and/or understand better) exchanging briefly with the partners / analysts who are leading the conversations and are more into the company.
It normally consists of just one call and it usually takes one hour (flexible), but in some (rare) cases it is required a second call (30 min) to clarify some doubts.
Personal Introductions
This should not take more than 5 min overall.
I let the CTO know a bit about my (tech/engineering) background, my experience as an entrepreneur and projects I’ve built and scaled, and my current role as CTO of Kfund. This creates a very good starting vibe because the CTOs then see me not as a bullshitter but as one of them. Which I believe it’s true, since I am. The goal is to create a warm atmosphere.
Then obviously it is interesting to understand the background and experience of the CTO, how he/she met his/her current partners, what was his/her motivation to jump into the project plus the evolution of his role over time.
At this stage, we are looking for someone with a good level of English, capable of communicating clearly and effectively. Strong communication skills are essential, as the role requires engaging with different stakeholders and conveying ideas with confidence. We also value self-assurance, as it helps in making decisions, handling challenges, and presenting ideas persuasively.
High level talk about company and product
Unless the company is doing something very special or the product is very complex, this section should be skipped. I try to come to the call with my homework done so we can be efficient and get straight to the following points.
I like to talk about the overall headcount and structure of the company. The goal is to understand the maturity and stage of the business and have some context about it in order to know whether the tech is evolving at the same pace (or not) as the rest of the departments.
A key challenge here is ensuring a high-level, full understanding of other departments—a requirement that is often overlooked. Surprisingly, it’s not uncommon for a CTO to have limited knowledge of what happens beyond the tech scope. However, cross-departmental awareness is essential for making informed decisions, aligning strategies, and fostering collaboration across teams. We expect candidates to break these silos, proactively engage with different areas of the business, and develop a holistic view that drives overall company success.
The objective is to get deeper into the tech and product teams. Understand the organigram, layers, departments, sub departments, (inter)relations, processes. Focus on the key members, intermediate managers (if existing), levels of seniority, different roles. To sum up, evaluate how (well) balanced the team is and how much behind or beyond it stands compared to other departments (sales, marketing…).
A crucial issue for those responsible for the technology area of a startup that is taking its first steps is assessing how the tech department compares to others—whether it is lagging behind or operating far ahead. Understanding this balance is key, as both scenarios can impact overall business alignment and efficiency. Additionally, it is essential to evaluate whether the tech team is under or over-resourced, as either situation could pose a risk to business growth. An under-resourced team may struggle to keep up with demands, while an over-resourced one could lead to inefficiencies and unnecessary costs. We expect candidates to critically analyze these dynamics and ensure the tech function is optimally structured to support sustainable growth.
Main goal is to not really evaluate what’s in place (what it is good or bad is very subjective, and most times the answer is “it depends” since what it can be good at a given stage can be not as good for later one) but assess the capacity of leadership and strategic thinking of the CTO and identify risks and challenges.
A core duty of the tech lead role is assessing how the company’s technology stack compares to industry standards—whether it relies on legacy systems or remains up to date with modern best practices. It is also essential to evaluate whether the technologies in place impact talent acquisition and retention, as outdated or unpopular tools can deter top candidates. Additionally, the chosen technologies must support product scalability at a reasonable cost. While they don’t always have to be the absolute best, they should at least avoid being a limiting factor to growth and efficiency. We expect candidates to critically analyze these aspects and ensure the tech strategy aligns with both business needs and industry trends.
And most important, understanding the matrix reliability / maintainability / cost.
The level of confidence and knowledge the CTO shows about these topics are among the most important points to tackle within this session.
Being closer to success in this area requires maintaining the right balance between scalability, cost, and reliability—an essential factor in sustaining business growth. Ensuring this area is fully covered with the right talent is critical to preventing constant distractions from operational tasks that could divert focus from more important strategic or even tactical developments. By having a well-structured team in place, the company can optimize resources, improve efficiency, and stay focused on long-term innovation and expansion.
In a very simple way, most products are ingested with some data (input), something is done with it (crunching) and then what’s produced (output) it’s somehow consumed.
From a risk point of view, it’s very important to identify data sources (first party, third party) and understand how this data is read and gets ingested into the system.
Then, about the data crunching
Finally, once the output is ready to be consumed,
The most significant challenges here are ensuring the reliability of multiple data sources while maintaining consistency and accuracy across them. Managing the maintainability and standardization of integrations is critical to avoiding technical debt and inefficiencies as the system evolves. Additionally, the technologies and services used for data crunching and mining must be carefully evaluated to strike the right balance between scalability and cost. Choosing the right tools and frameworks is essential to ensure that data operations remain efficient, cost-effective, and capable of supporting long-term business growth.
Depending on the project, some other topics might be worth discussing. I.e: AI, intellectual property, proprietary algorithms, third-party tools usage, partnerships, specific departments…
The goal is to try to understand the “secret sauce” and what makes the company unique in terms of core technology and defensibility.
This typically is the pending subject to most of the startups we evaluate, because it’s never a priority until the company becomes a late stage one or it’s simply too late. However, for some industries / products / types of clients it’s important to take security more seriously. The goal is to identify what actions have they taken (very rare), what they want to do and / or what’s their roadmap (more often) and most of the time provide them with some very high level shortcuts, tips and recommendations.
At this point, we expect a high level of knowledge about what needs to be done in the security field, along with a strong awareness of how it impacts business growth. Security is not just a technical necessity but a fundamental aspect of maintaining trust, compliance, and operational stability. Poor security decisions can lead to financial and reputational risks, while a well-structured approach can enhance resilience and enable sustainable growth. Ensuring the right measures are in place allows the business to scale confidently, protect its assets, and minimize vulnerabilities that could hinder long-term success.
One of the most important sections. Understand top 3 worries of the CTO (typically HR, team scalability, be able to keep up with sales / business) and evaluate what’s his / her strategy to tackle these points within the following 6 / 12 / 18 months.
It is essential to have a strong awareness of both individual and team weaknesses, recognizing areas that need improvement without hesitation. Self-confidence is crucial—not only to acknowledge these gaps but also to proactively develop a clear roadmap to address them in the short, medium, and long term. The ability to identify challenges, set realistic goals, and take decisive action ensures continuous growth and improvement.
I also try to be very honest and transparent and if there’s still time I challenge him about some aspects explained in the previous point which I find a bit immature, contradictory or somehow “weird”.
A strong sense of humbleness is essential, along with the ability to receive feedback without arrogance. True growth comes from being open to different perspectives, acknowledging that there is always room for improvement, and valuing input from others. A lack of arrogance fosters collaboration, strengthens team dynamics, and creates an environment where constructive feedback is seen as an opportunity rather than a threat. Embracing this mindset not only enhances personal and professional development but also contributes to a healthier, more effective work culture.
This process takes me around 15 min, but it’s the most difficult one.
I elaborate a battery of 6-8 very high level bullet points where I highlight (trying to be as objective as possible, but still very subjective) strengths, risks and challenges. Moreover, I also try to evaluate the company from a tech perspective. From this angle, it’s not about whether the tech is good or bad, but if its tech stands behind, runs at the same pace or it’s beyond the business. In my opinion, understanding this aspect is key to evaluate if the technology is enhancing or putting obstacles to the business growth.
Then this information is shared with the rest of the team and included into the internal analysis document. Often, (some of) these points are tackled into the Investment Committee and if needed we go in detail into some of the risks and challenges.
Technology is normally a key factor to determine whether to invest or not in a company. We could affirm that the vast majority of disruptive projects (startups) who are likely to be invested by VC funds are either very tech-oriented (enabling technologies) or the technology is a boost for internal productivity and efficiency. In any case, in-house technology brings defensibility and makes a company more unique.
Furthermore, having a proper and deeper understanding of the technology behind a project / product becomes essential to:
Voilà, c’est ça. This is the trade off I found to maximize the (tech) knowledge I can grasp and minimize the time spent needed to evaluate a project. If you’ve made it this far, you’ve earned a little something! Grab the deck with all the key info from this post right here.
I hope this helps!
PS: @CEOs Please. Leave. Your. CTO. Alone. And. Independent. And. Trust. Him/Her. Thank. You. ;-)
