Raising a Seed Round: Passing Technical Due Diligence

At seed stage, technical due diligence is usually a call and an architecture look, not a full repository audit, but the questions are the same: can the product scale, is the code and IP clean enough to own, and what will fixing the gaps cost? Prepare the evidence, confirm every contributor assigned their IP, and fix the red flags before the call.

This is engineering guidance, not legal or financial advice; deal terms belong with your advisers.

If you would rather have the gaps found and fixed for you before investors look, see how RAITHub would help below. This guide is for a founder with a term sheet in sight at seed stage. It covers what a seed-stage review actually looks like, the evidence to have ready, the red flags that worry investors, and how to run the review on yourself first.

What does technical due diligence look like at seed stage?

Lighter than later rounds. A seed investor is usually buying the team and the idea, so the technical review is often a one-hour call with a technical adviser and a look at the architecture, not the read access, automated scans and written report that a growth round or acquisition brings. Depth scales with the cheque. The companion post SaaS technical due diligence covers the full, later-stage version in detail; this one is about passing the lighter seed-stage pass.

That lightness is not a reason to be unprepared. At seed stage, a review that finds missing IP assignments or a founder who cannot explain the architecture does more damage, because there is less traction to offset it. The bar is "credible and clean", not "elite on every metric".

What do seed investors actually check?

A smaller version of the standard review. These areas come up most, and the right-hand column is what lets you answer with evidence rather than an interview.

Area	What a seed reviewer asks	Evidence to have ready
Architecture and scale	Can this handle more customers without a rewrite? What breaks first?	A current architecture diagram and the data model
IP ownership	Did every founder, contractor and agency assign their work to the company?	Signed IP assignments for every contributor
Code quality and tests	Is the core under automated test, or is every change a risk?	Test counts on the money paths and CI pass history
Security basics	How are logins, access control and secrets handled?	Where secrets live, who can read production data, last dependency scan
Key-person risk	What happens if one engineer leaves?	Company-owned accounts, basic runbooks, nothing on one laptop
Cost to run and build	What does hosting cost, and is the roadmap realistic for the raise?	Current monthly cloud cost and a short known-debt list

Why does IP ownership matter so much at seed stage?

Because an investor is buying a share of what the company owns, and a company that cannot prove it owns its code is selling something it may not have. This is the single most common avoidable finding. It happens when an early contractor, freelancer or agency was never asked to sign an assignment, or when a co-founder's work was never formally assigned to the company.

The wording matters: a present assignment ("hereby assigns") is generally treated differently from a promise to assign in future ("will assign"). The clauses to look for are in the IP assignment checklist. Collect signed assignments from every past and present contributor before the review, not during it. This is general information, not legal advice; confirm your paperwork with your own adviser, because interpretation is jurisdiction-specific.

What red flags worry investors at seed?

The ones that are expensive or slow to fix after money is in. In practice:

• Missing IP assignments from early contractors, so ownership cannot be proven.
• No tests on billing and permissions, so every change risks revenue or a data leak.
• A founder who cannot explain the architecture or does not know what the product costs to run.
• One person holds the keys to production, the domain or the cloud account.
• Weak isolation between customers, where one could read another's data through a missing check.
• Untested backups. A backup that has never been restored is an assumption, not a safety net.

Most of these are fixable in weeks if found before the review. Found during it, they become reasons to lower the valuation, add conditions, or walk away.

How should you prepare for a seed technical review?

Run the review on yourself, two to four weeks before you expect it. The seed version is shorter than the growth-stage one but the same shape.

1. Inventory the repositories, environments, third-party services and who has admin access to each.
2. Collect IP paperwork for every founder, contractor and agency that has touched the code.
3. Run a dependency scan and update high-severity findings.
4. Confirm tests on the money paths and that CI is green, and note the test counts.
5. Restore a backup into a clean environment and record how long it took.
6. Write a short data-room pack: one architecture diagram, a known-debt list with a plan, and your monthly cloud cost.

Do-it-yourself estimate: 3 to 5 days for a founder or CTO who knows the codebase, longer if the IP paperwork has to be chased down. The main risk of doing it alone is marking your own homework; an outside read finds the gaps the team has learned to live with. What an independent review covers is described in what to expect from a code audit.

Buy, build or hire?

Option	Choose this when	Watch out for
Off-the-shelf scanning tools	You need a dependency scan and licence list quickly and can act on the results	Tools list issues; they do not fix them or judge your architecture
Self-review from a checklist	A strong technical founder and time before the call	Blind spots the team has grown used to; chase the IP paperwork early
An outside pre-diligence review and fix	Code from several past vendors, thin docs, or no in-house CTO	Make sure the reviewer also fixes or plans fixes, and describes security testing honestly

When don't you need outside help?

• The review is a short call and your technical founder can answer the table above with evidence.
• The investor requires a certified penetration test or a SOC 2 report. Those come from certified firms and auditors, not from RAITHub, which is not SOC 2 or ISO 27001 certified.
• You need legal or financial diligence. That belongs with your lawyers and accountants.
• You want engineers placed in your team by the hour. RAITHub works fixed-scope or as a dedicated monthly team and does not offer staff augmentation.

How RAITHub would help

Scope, agreed in writing before work starts:

• A pre-diligence review against the seed-stage areas above, with a severity-ranked findings list.
• A dependency scan and updates for high-severity issues, and a check that every contributor's IP is assigned.
• Fixes for the findings that would move a valuation: tests on billing and permissions, customer isolation, secrets and access.
• Application security testing against OWASP guidance, and a recorded backup restore. This is not a certified penetration test and produces no compliance attestation.
• A short data-room pack: architecture diagram, runbooks, known-debt plan and monthly cost.

Timeline: 2 to 4 weeks for a review-and-fix scope, in line with the code rescue range; larger remediation at 4 to 6 weeks fixed scope.

You receive: automated tests and CI, handover docs and runbooks, and full IP under NDA.

If the review is likely to surface that the product has outgrown its foundations, read your MVP outgrew itself. The SaaS development service lists what is included; book the free 15-minute technical audit and bring your architecture diagram and your list of past contributors.

Frequently asked questions

Do seed-stage investors run technical due diligence?

Often a lighter version: a call with a technical adviser and a look at the architecture, rather than the repository access and written report of a growth round. The questions are the same, so being unprepared still costs you, especially when there is less traction to offset a bad finding.

What is the most common technical red flag at seed?

Missing IP assignments from early contractors or a co-founder, so the company cannot prove it owns all its code. Collect signed assignments from every contributor before the review. This is general information; confirm your paperwork with your adviser.

Do I need SOC 2 to raise a seed round?

Not usually. Seed investors want sound basics and a credible plan, not formal certification. A SOC 2 report comes from an independent auditor, and RAITHub is not SOC 2 certified and cannot provide one. A dated plan, where relevant, helps more than nothing.

How do I prepare for a seed technical review?

Run it on yourself two to four weeks ahead: inventory your accounts, collect IP paperwork, scan dependencies, confirm tests on the money paths, restore a backup, and write a short data-room pack with an architecture diagram, a known-debt plan and your monthly cost.

Is RAITHub's security testing enough for investor diligence?

It is application-level testing against OWASP guidance and finds common issues, but it is not a CREST- or PCI-certified penetration test and produces no compliance attestation. If an investor requires a certified test, use a certified provider; RAITHub will say so in writing.

How long does it take to fix diligence gaps?

Most seed-stage gaps are fixable in weeks if found early: adding tests to billing and permissions, tightening customer isolation, securing access and collecting IP paperwork. Only a short review can scope your case; RAITHub gives a fixed written quote after a free audit and publishes no rates.