Code Audit Before Fundraising: Preparing for Technical Due Diligence as a Founder

What investors look for in your code, what to fix before the data room opens, what can stay on the roadmap, and how to organise the audit.

Key Takeaways

  • An audit you commission before the round turns surprises into known, costed items. The investor's review will happen anyway; it's better if it finds nothing you didn't already know.
  • The most common blocker isn't technical, it's legal: does the company actually own its code? In France, code written by a freelancer, an agency or a founder before incorporation doesn't automatically belong to the company.
  • Open source licences and vulnerable dependencies almost always come up: Black Duck's 2025 OSSRA study found licence conflicts in 56% of audited applications and vulnerable components in 86%.
  • Before the data room opens, fix anything touching ownership, critical vulnerabilities and backups. The rest can become a costed roadmap funded by the round.
  • Investors don't expect perfect code. They expect a team that knows its risks and can explain them.

A fundraise is won first on market, team and traction. But once the product is the core of the value, a serious investor will want to know what they're buying: they'll have the code, the architecture and the contracts reviewed by someone they trust, often a former CTO or a specialist firm. This guide takes the founder's point of view: what that review will look for, how to prepare, and what to fix first. If you're on the other side of the table, our guide to technical due diligence before an acquisition or investment covers the buyer's process.

Why audit your own code before the investor does

The investor's technical due diligence comes late, when the timeline is tight and every finding becomes a negotiating point: a condition precedent, an extra warranty, a valuation adjustment, or simply a doubt that slows everything down. An audit commissioned earlier changes three things:

  • You know your risks before they do. A problem you present yourself, with its fix plan, weighs far less than one someone else discovers.
  • You have time to fix things. Assigning rights, removing a component under an incompatible licence or setting up tested backups takes weeks, not days.
  • You arrive with documents. A recent report, a dependency list and an architecture diagram answer half the questions in advance.

What a technical reviewer looks at

1. Code ownership

This comes first, and it's the most underestimated. Under French law, rights in software created by an employee in the course of their duties belong to the employer (Code de la propriété intellectuelle, article L113-9). For everyone else, freelancers, agencies and founders before the company was incorporated, you need a written assignment that specifies the rights assigned, their scope, duration and territory (article L131-3). Other jurisdictions have their own rules, but the question is the same everywhere.

What you'll be asked for: a list of every person and company that wrote code, and for each one the contract assigning the rights to the company. The classic red flag: a first prototype written by a freelancer, or by a co-founder before incorporation, with no assignment at all. Our guide to who owns the code covers the rules in detail.

2. Open source licences

Every modern application relies on hundreds of open source components. The question isn't whether you use them, but whether you respect their licences. Black Duck's 2025 OSSRA study found licence conflicts in 56% of audited applications (Black Duck). The classic issue for a SaaS business: a library under the AGPL, which can require you to publish the source of an application that uses it over a network (GNU AGPL v3).

What you'll be asked for: an inventory of dependencies and their licences. A software bill of materials (SBOM) in SPDX format can be generated automatically and answers the question.

3. Security and data

The reviewer looks for obvious weaknesses rather than running a full penetration test: secrets (API keys, passwords) in the repository history, access control enforced on the server, outdated dependencies, poorly protected personal data. The same OSSRA study found vulnerable open source components in 86% of applications, with 81% containing at least one high- or critical-risk vulnerability. If you process personal data, expect questions about article 32 of the GDPR and your processors.

Free tools such as Gitleaks or GitHub secret scanning find forgotten secrets in minutes. For a fuller checklist, the OWASP ASVS is the most widely used standard.

4. Architecture against the growth plan

Your deck promises ten times more customers in two years. The reviewer asks whether the current architecture can keep up and, if not, what adapting it will cost. A simple architecture isn't a weakness; a growth plan that quietly assumes an unbudgeted rewrite is.

5. Key-person dependency

How many people really understand the system? If the answer is "one", and that person is a freelancer or a co-founder who won't stay, it's a major risk in an investor's eyes. Documentation, code review and at least two people able to deploy are the expected answers.

6. Engineering practices

Automated tests on critical paths, continuous integration, repeatable deployments, tested backups, production error tracking, infrastructure cost. The DORA metrics (deployment frequency, lead time for changes, change failure rate, time to restore) are a vocabulary many reviewers use.

Fix it now, or put it on the roadmap?

You won't have time to fix everything, and nobody expects you to. The simple rule: fix whatever threatens ownership, data security or service continuity; present the rest as a costed plan.

FindingFix before the data roomCan stay on the roadmap
Code written by a freelancer or founder with no written assignmentYes: get the assignments signed
Component under a licence incompatible with your modelYes: replace it or buy a commercial licence
Secrets in the repository, known critical vulnerabilityYes: revoke, fix, document
No backups, or backups never restoredYes
Old dependencies with no critical vulnerabilityYes, with an update schedule
Low test coverage outside critical pathsYes
Architecture that must evolve for the growth planYes, with an estimate
Incomplete documentationPartly: enough for an outsider to understand and deployThe rest

The roadmap has a real benefit: it shows you know where the technical share of the money will go, which is exactly what an investor wants to hear.

How to organise it

  1. Start the audit before the data room opens, leaving enough time to fix what must be fixed. Rights assignments and component replacements take longest.
  2. Choose an auditor independent of the team that wrote the code. A report written by your own developers carries less weight with an investor.
  3. Give full access: repository, history, infrastructure, supplier contracts. An audit of an extract reassures nobody.
  4. Fix the blockers, then ask for a quick check of the fixes.
  5. Prepare the technical part of the data room: the report or its summary, the SBOM, the rights assignments, an architecture diagram, the backup policy, and the list of processors handling personal data.

For a Next.js application, our Next.js code audit article includes a first pass you can run yourself; what a technical audit includes describes the full scope.

Frequently asked questions

Do investors really review code at seed stage? Not always. At seed, the review is often limited to a conversation with the CTO and a few questions about code ownership. It becomes more common and deeper from Series A onwards, and close to systematic when the technology is the main asset. Code ownership is checked in every case.

Can our CTO do the audit? They can and should prepare the ground: inventory, SBOM, documentation. But an outside reviewer finds what the team no longer sees, and an independent report carries more weight with investors.

Will an audit report with problems scare investors off? Rarely, if it comes with a plan. No codebase is perfect. What worries investors is a problem they find that the team didn't know about.

Should the auditor sign an NDA? Yes, before getting access to the code. It's standard, and a serious auditor will offer one.

FNB Solutions carries out independent technical audits for founders preparing a round and for investors assessing one. See our technical audit service, or tell us about your timeline.

Sources

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