How VCs Evaluate Startup Engineering Teams

Technical due diligence is increasingly common at Seed and Series A. Here's what investors actually look for when evaluating your engineering team and codebase.

What VCs Actually Assess

VCs conducting technical due diligence typically focus on three areas:

Risk assessment: What could go wrong technically that would kill the company?
Execution capability: Can this team actually build what they're promising?
Scalability: Can the technology and team scale with growth?

They're not looking for perfection — they're looking for evidence that you can ship, scale, and adapt.

Team Composition and Leadership

What they look for:

Technical co-founder or CTO: Is there experienced technical leadership?
Team depth: Are there at least 2-3 strong engineers who can own significant areas?
Retention: High engineering turnover is a red flag
Hiring pipeline: Can you attract and close good engineers?
Diversity of experience: Mix of startup and big-company experience is often positive

Questions they ask:

"Who's the most critical engineer and what happens if they leave?"
"How long does it take to onboard a new engineer?"
"What's your hiring funnel look like?"
"Who owns infrastructure vs. product?"

Technical Architecture Review

Areas they examine:

System architecture: Is it appropriate for current scale? Can it grow?
Technology choices: Are they standard and maintainable?
Data architecture: How is data stored, accessed, and protected?
Technical debt: Is it understood and managed, or hidden?
Security: Basic security hygiene (encryption, auth, access control)
Monitoring: Do you know when things break?

What they're really asking:

"If we give you $10M, will you need to rewrite everything, or can you scale what exists?"

Engineering Processes

Deployment frequency: How often do you ship?
Testing: What's your test coverage and strategy?
Code review: Is there a review process?
Incident response: What happens when things break?
Documentation: Can new engineers understand the system?
Planning: How do you prioritize and estimate work?

Common Red Flags

Red Flag	What VCs Think
No technical co-founder	Who's making technical decisions?
100% outsourced development	No ownership, knowledge leaves when contract ends
High engineer turnover	Culture or leadership problems
No version control	Serious process issues (rare but happens)
Can't explain architecture	Team doesn't understand their own system
Major upcoming rewrite needed	6-12 months of investment just to maintain
No monitoring or logging	Flying blind in production
Single points of failure	One person leaving could cripple the company

How to Prepare for Technical Due Diligence

Before the process:

Create a 1-page architecture overview
Document known technical debt (honesty is valued)
Prepare team bios and org chart
Have deployment and incident metrics ready
Clean up obvious security issues

During the process:

Be honest about weaknesses
Show you understand tradeoffs
Have your technical lead present (not just CEO)
Be prepared to walk through code
Explain why decisions were made, not just what

What impresses VCs:

Awareness of technical debt with plan to address
Shipping velocity with acceptable quality
Engineers who understand the business
Evidence of learning from mistakes
Pragmatic technology choices