I will be writing a series of blog posts on technical due diligence. One might ask how or why would you write so much on technical due diligence? I mean – really – how can performing a technical due diligence be so involved? There are any number of reasons.
Entrepreneurs are often very enthusiastic about their invention/product. Without an outside independent voice, it can be difficult to know where truth begins and fiction ends. So, a technical expert needs to come in, step back, and look at the big picture to make sure the picture is as rosie as it appears.
Many great inventions are just that – an invention – until someone makes a product out of them. A product that is needed and can be manufactured cost effectively. It is important to look at the design early on in order to ensure that it can be manufactured. Knowing this is very important for early stage companies. Starting down the development path with an overly expensive product can kill the early adoption of the technology.
An investment into the business will surely help – won’t it? Of course we know that what they do with the money, the spend rate, and the generation of revenue all impact the usefulness of the cash influx. So, taking a look at the manufacturing plans, the stage of development, etc. is a very useful exercise because it can determine if the proposed investment is staged properly or if it is completely inadequate to get where you want to go.
These issues and many more represent what I will talk about over the coming weeks – the value of technical due diligence.