This document summarizes a presentation given at CODECAMP in Cluj-Napoca, Romania on technical diligence for startups raising capital. It discusses how technical preparation can impact fundraising success. Key points include understanding expectations for budgets, documentation, and scalability at different stages. Diligence assessments cover intellectual property, security, and demonstrating how previous funds were spent. Having the right contracts and protecting company assets is also important. Technical founders must be prepared to discuss their architecture and show how issues will be addressed.

1. TechMoney: Prepping for Diligence
The Technical Side of Raising Capital
Presented by:
Stefan Koritar (@skoritar)
EU Entrepreneur-in-Residence, Cachette Capital
In Collaboration:
Ellie Cachette (@ecachette)
General Partner, Cachette Capital

2. Scan here to give feedback
http://cluj.codecamp.ro/feedback/6
Room 6

3. CODECAMP Partners
Cluj-Napoca, Romania
Session 7
17:00 - 17:45
8 April 2017

4. #TechMoney Twitter: @skoritar

5. TechMoney: Prepping for Diligence
CONFIDENTIAL © Cachette Capital Management 2017
The technical side of raising capital [English], 45 Minute
presentation. CodeCamp. Cluj-Napoca Romania.
A Presentation by: Stefan Koritar
www.cachettecapital.com
April 2017

6. A Little About US (CCM)
Cachette Capital or “CCM” is a full service Fund of Funds which
specializes in venture capital meaning:
= WE ALL NEED EACH OTHER
• Venture Capitalists or Venture capital firms need us,
we are their investors.
• Likewise, in order to help put money to work we need
the venture capitalists.
• For venture capitalists to make money, they need
great entrepreneurs

7. How Fund of Funds Work
Fund of Funds (FUND I)
Family Offices Pension Funds Individuals Foundations
INVESTORS
500,000’s of companies
VC Fund VC Fund VC Fund VC Fund VC Fund VC Fund
VENTURE CAPITAL
CONFIDENTIAL © Cachette Capital Management 2017
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8. CCM Expertise in Diligence
CONFIDENTIAL © Cachette Capital Management 2017
As a fund of funds we often perform three CORE types of diligence for ourselves or
for our venture partners to ensure investment quality:
Portfolio Diligence - Our experience as founders helps us understand how to launch
and grow companies, and how to vet VC firms and their portfolios
Technical Diligence - Our technical expertise, and deep understanding of software,
allows us to value new technologies
Emerging Market Comparison - Our global perspective allows us to spot emerging
markets and identify venture firms poised to succeed in those markets
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9. A Little About Me…
Stefan Koritar
• EU Entrepreneur in Residence for CCM
• Co-founder of Sloppe
• Product Manager, Telenav
• Regional Director Balkans, Startup Grind
• Entrepreneur at Heart
“Think meta”

10. Purpose of Today’s Talk
• Learn some tips and tricks from Silicon Valley
• Go over basics of technical diligence
• Build great products from Day 1

11. What is Technical Diligence?
• Prepping for Investors
• Knowing what “assets” are
• Development Budgets per Financing Stages
• Planning For User Growth and Scaling
• VC Approved Metrics
• Technical Documentation
• Risks to Fix or Avoid During diligence

12. Introduction: Why Technical Diligence?
• Founders and CTOs often overlook the value of technical diligence
• There are tricks to making a startup more valuable based upon
technical execution
• Technical preparation can make or break a startup
$$$$
Don’t lose money over simple technical mistakes which are preventable

13. Prepping For Investor Talks
• When do you start preparing?
• Prepping for investor diligence
• How can your dev team ruin funding
• Budget Expectations and Technology
Expectations

14. When Do You Start Preparing?
The right answer for when to start prepping for technical diligence is
“now” but the practical answer is when you actually have something that
works:
• When you have a working prototype and MVP and
plan to start more serious development
• When you start to get users and tractions on some
stage of a working product
• As soon as servers or software subscriptions are
needed (say like Heroku). What account should all
those link to?

15. Ways Your Dev Team Can Ruin Funding
Surprisingly having a great developer or dev team is only part of it. Here
are some common ways your dev team can kill funding:
• If the persons, team or firm do not have enough equity or
the correct contracts and agreements in place.
• When you start to get users and tractions on some stage
of a working product
• If there is any sense of dev fraud: lies about how much
code was done, if developers over billed, or not technical
experience on staff to sniff it out

16. Budgets: Know Your Stage
• Whether its your funding stage or product stage, understand where
you are in the mix.
• If you are looking for a product market fit, go low on design.
• If you are looking to scale, go high on dev and growth

17. Budgets: By Tech Category
• Operational Costs (servers, emails, website)
• Development Costs (developers, new dev)
• Hidden Costs (APIs, programs needed ex: Twilio)
• Development Team churn
- Product market fit
- Technical investment (money lost or gained in dev lessons)
- Development Teams, Internal and/or Outsourced

18. Unless you are entering a Series A or B odds are you have very little to relevant
intellectual property that has been established. It’s the nature of building
something evolved.
What is IP?
• Patents
• Intellectual Property
• Team - 1:1 meetings with dev team
Understanding “IP”

19. Patents
In 90% of cases, especially early stage technologies patents are worthless.
Unfortunately legal things take so much longer to hash out than tech being
replicated. That said, many investors DO care that you are atleast mindful about it.
Things to consider around patents:
CONFIDENTIAL © Cachette Capital Management 2017
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• Do you even have the right attorneys to defend a infringement?
• Do you have enough MONEY to defend an infringement?
• Could your product be easily replicated? If so would a patent
even protect anything?
• Why do you want a patent?

20. Intellectual Property
Unlike patents, intellectual property is VERY REAL. This means that whatever is
being created even if a business process, industry knowledge or otherwise, needs
to be protected and under the umbrella of a company. For tech that means:
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• Servers and all tech, even laptops, should link to the SAME
corporate entity
• Employees and contractors should all have contracts outlining
whatever the relationship is, specifically around “invention”
and “design” EX: NDAs or PIIAs.
• Intellectual Property can also be business processes too, how
can you protect your employees from not creating
competitors?

21. Dev 1 on 1: Power of Connecting
One of the best ways to protect a company is by having
great relationships with all employees, especially with
developers.
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22. Why Does Technical Diligence Matter?
If you want to get your company acquired and are doing anything remotely in
technology, you need to know what your acquirers want and value for tech.
If you want or need funding, ESPECIALLY, if you are claiming you need $ for
development investors want to know WHY and WHAT is being built.
If you have already spent investor money or a substantial amount of money on “tech”
investors want to see how and why that was spent.
If you are accepting a strategic partner and meshing up technologies, they are going
to want to know the tech is secure and unique.
CONFIDENTIAL © Cachette Capital Management 2017
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23. Tools and Tips for Scaling
• Planning for user growth and scaling during fundraising
• Unit Tests / Integration Tests / Code Coverage
• Version Control / Github
• Monitoring
• Load Testing
• Automated CI
• Automated Deployments
• Automated Scaling

24. The Common Speedbump: Security
• Intrusion Detection / Intrusion Prevention
• Backups / Disaster Recovery & Business Continuity
Plans
• HTTPS/SSL/TLS
• Security Audits & Penetration Tests

25. Technical Documentation Expectations
• Bare minimum
• Frameworks
• Wikis
Do you have any documentation?

26. Fix or Avoid Risks
• Do the right preparation
• Always be ready for an audit
• Understand the math and value ROI of tech

27. Q & A
CONFIDENTIAL © Cachette Capital Management 2017
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28. Thank You
For more information visit:
Codecamp.com/decks
slideshare.com/CachetteCapital
Or email:
ellie@cachettecapital.com