Investor Due Diligence Checklist: Technology Risks from Communication to Identity

Hook: The unseen tech risks that derail deals — fixed before term sheets

Slow manual checks, unverifiable founder claims, and a surprise breach in a target’s communications stack can convert a fast-moving opportunity into a months-long headache. Investors in 2026 must treat technology risk as a first-class diligence track. This checklist focuses on five high-impact areas that routinely create deal friction: secure communications, identity verification, vendor patching, AI model risk, and CRM data health. Follow it to qualify risk quickly, ask the right questions, and reduce false positives while speeding execution.

Why this matters now (2026 context)

Three shifts in late 2025–early 2026 changed priorities for investors performing technical diligence:

• Google’s early-2026 changes to Gmail and deeper integration of personal AI into inboxes have raised data exposure considerations for founders and enterprises using consumer mail for sensitive investor communications (Forbes, Jan 2026).
• Messaging is moving: RCS is approaching cross-platform end-to-end encryption, changing how OTPs and founder-VC communications should be evaluated (Android Authority, 2024–2026 workstreams).
• AI is now both a primary attack vector and the leading defensive tool; the World Economic Forum’s 2026 outlook and subsequent industry reports flag AI as the most consequential cybersecurity driver for this year (WEF/PYMNTS, Jan 2026).

“AI is expected to be the most consequential factor shaping cybersecurity strategies this year.” — WEF Cyber Risk in 2026

How to use this checklist

Score each subarea Red / Yellow / Green. For each Red item, require remediation or price it into valuation. Bring technical experts for Yellow items where root cause needs specialist review. Use the evidence templates in each section to request verifiable artifacts from founders and vendors.

1) Secure communications — beyond “we use email”

Fast question for founders: How do you exchange credentials, contract drafts, cap table exports, and legal documents with investors and employees? If the answer is consumer email, Slack DMs, or SMS, flag it.

Core checks

• Email hygiene: Ask for published DMARC (p=reject or quarantine), SPF, and DKIM records. Test with a DMARC analyzer and request the domain’s aggregate DMARC reports for the prior 90 days.
• Workspace admin controls: Verify enforcement of organization-level controls (SSO, MFA, device management, external sharing policies) on Google Workspace / Microsoft 365 — not just per-user settings.
• Encryption & access: Confirm whether high-sensitivity documents are stored in E2EE systems or encrypted at rest with customer-managed keys. For consumer inboxes used for primary communication, require migration or secure gateways.
• Out-of-band verification: Confirm that any credential resets use channels protected by E2EE (or authenticated push tokens) rather than SMS or unverified email. If the company uses SMS OTPs, require MFA alternatives and risk-mitigating throttles.
• Messaging channels: Identify whether product or comms use SMS vs. RCS vs. OTT apps. For RCS, validate vendor/provider plans for E2EE and carrier support given the emerging RCS E2EE work in 2025–26.

Evidence to request

• DMARC aggregate reports (last 90 days)
• Workspace security settings screenshot + SSO config
• Encryption policy, key management documentation
• Messaging architecture diagram showing OTP channels and fallback logic

Red flags

• No DMARC or permissive DMARC (p=none)
• Consumer email as the default for contract execution and sensitive exchanges
• OTPs exclusively via SMS without adaptive risk-based MFA

2) Identity verification robustness — static docs won’t cut it

Investor-facing identity verification is now a regulatory and fraud risk. Accelerated by synthetic identity attacks and AI-enabled impersonation, identity proofing must be measured with technical signals and auditability.

Core checks

• Proofing levels: Classify the company’s identity flows into levels (L1: email/phone; L2: document + selfie liveness; L3: authoritative data + biometric + verification with third-party sources). For investor onboarding and founder accreditation, require L2+ with documented exceptions.
• Vendor validation: If the company uses third-party IDV providers, request SOC 2 Type II, vendor penetration test reports, and evidence of data retention and deletion policies. Confirm vendor support for cross-border KYC and AML where applicable.
• Audit trails: Insist on immutable logs for verification sessions (timestamped video/photo capture, IP address, device metadata). Logs should be exportable and tamper-evident.
• Accredited investor checks: For funds and platforms, require policy on income/net-worth proofing, and documented reliance on suitable proof (tax filings, account statements) plus repeatable re-verification cadence.

Evidence to request

• Sample verification session audit log (sanitized)
• Vendor security posture (SOC 2, pen test, data flow diagram)
• Identity verification policy and retention schedule

Red flags

• Relying on email-only proofs for founder identity or investor accreditation
• No audit trail for verification events
• Vendor refuses to share security evidence

3) Vendor patching & supply-chain hygiene — the operational backbone

Patch management is operational risk that shows how disciplined a team is. Patch slippage often predicts breaches; Microsoft’s Windows update warnings in early 2026 are a reminder that patch ecosystems are brittle and require verified processes.

Core checks

• Patching cadence: Request policy showing required patch windows (critical: 48–72 hours; high: 7–14 days; medium/low: 30 days). Confirm adherence via change logs and scheduled maintenance records.
• SBOM & third-party components: Obtain an up-to-date Software Bill of Materials for core product components. Verify SCA (Software Composition Analysis) scans for known CVEs and fixes.
• Vulnerability management: Confirm vulnerability triage process, CVSS threshold for prioritized remediation, and past metrics (MTTR for critical vulnerabilities).
• Vendor SLAs & breach history: For critical third-party services (cloud infra, auth providers, IDV vendors), request SLA terms, breach disclosure history, and evidence of coordinated disclosure processes.

Evidence to request

• Recent vulnerability scan and patch result summary (last 90 days)
• SBOM for production builds
• Change log showing patch deployment times

Red flags

• No SBOM or SCA practice
• Median MTTR for critical CVEs > 30 days
• Unpatched dependencies with known exploits listed in public advisories

4) AI model risk — governance, data provenance, and adversarial exposure

AI is a product and governance risk. Models that power core product features, scoring systems, or investor-facing outputs must be auditable, monitored for drift, and defended against misuse.

Core checks

• Model inventory: Catalog models in production, dataset sources, training dates, intended purpose, and owners. Treat each model as a discrete asset in risk registers.
• Data provenance & labeling: Request provenance records for training data. Look for synthetic data mixtures, third-party dataset licenses, and bias-mitigation steps.
• Performance & drift monitoring: Confirm automated monitoring with thresholds for retraining (e.g., accuracy, false positive rate, distribution shift). Ask for recent drift incidents and responses.
• Adversarial testing & red-teaming: Check whether the model has undergone adversarial testing and red-team assessments. Confirm mitigations for prompt injection, data exfiltration, and model inversion attacks.
• Access controls and logging: Models and prompt stores should have RBAC, API rate limits, and full request/response logging retained for investigations.

Evidence to request

• Model inventory and model card(s) for high-risk models
• Recent drift reports and retraining records
• Red-team/pen-test summaries for models

Red flags

• No model inventory or undocumented model endpoints
• No drift monitoring or long delays between detection and retraining
• Third-party LLM usage without content filtering or output validation

5) CRM data health — the signal investors rely on

CRM is where deal metadata, investor conversations, and cap table snapshots live. Bad CRM data multiplies due-diligence effort and creates fraud risk when key fields are unaudited.

Core checks

• Data lineage & ownership: Map who owns each CRM field. Confirm that cap table snapshots are immutable exports linked to signed documents.
• Deduplication & enrichment: Check deduplication rules and enrichment pipelines. Look for sources of truth (legal docs, payment rails) vs. inferred data (LinkedIn parses).
• Consent & compliance: Ensure contact records include explicit consent metadata and data retention timestamps. Verify deletion/wiping processes for GDPR/CCPA compliance.
• Integration security: List all active integrations and webhooks. Confirm that API keys rotate and webhooks use HMAC verification or signed payloads.
• Audit & change history: CRM should retain a change log for key fields (owner, valuation, investor status) and allow export for forensic review.

Evidence to request

• Sample immutable cap table export linked to executed documents
• Integration list + access control matrix
• Audit log export for key changes (last 12 months)

Red flags

• No audit trail for cap table or investor records
• Multiple integrations with global admin keys active
• CRM enrichment that overwrites source-of-truth fields without approval workflow

Putting it together: a 10-point quick scoring matrix

1. Communications: DMARC + workspace controls in place
2. OTP channels: SMS-only? (Y/N)
3. ID Proofing: L2/L3 mandatory for investor onboarding
4. Vendor security evidence: SOC 2 / pen test availability
5. Patching cadence: Critical CVEs fixed within 72 hours
6. SBOM maintained and SCA scanned monthly
7. Model inventory & model cards for production AI
8. Drift monitoring + red-team evidence for models
9. CRM audit trail + immutable cap table export routine
10. Integration keys rotated and webhooks signed

Score each item 0–2 (0=fail, 1=partial, 2=good). 16–20 = Green; 10–15 = Yellow; <10 = Red. For Yellow and Red, require remediation timelines and a follow-up technical review before closing.

Case study (anonymized, real-world pattern)

We reviewed a late-seed B2B startup in 2025 whose public roadmap and demo impressed investors. During tech diligence we found: no DMARC, SMS-only password resets, undocumented third-party model answering investor queries, and a CRM cap table editable by multiple sales reps. The combined effect: a social engineering incident could generate fraudulent SAFE signatures and exfiltrate investor emails for BEC attacks.

Remediation took 6 weeks: DMARC enforcement, SSO+MFA rollout, replacement of SMS OTPs with app-based authenticators, a hardened model gateway with output filters, and CRM RBAC + immutable cap table exports. The investment closed with standard security covenants and a staged fund release based on milestones. That pragmatic remediation approach preserved the deal value while materially lowering execution risk.

Operational checklist: questions to ask founders (copy/paste for diligence decks)

• Who owns security, product, and data in the org? Provide names and org-level responsibilities.
• Provide DMARC reports, workspace admin screenshots, and SSO configuration evidence.
• Provide third-party vendor security artifacts (SOC 2 Type II, pen test) and breach disclosure policies.
• Share the SBOM and SCA scan summary for production builds.
• List all models in production, model cards, and drift monitoring dashboards.
• Export a sample verification audit log, anonymized but complete.
• Provide CRM audit logs for investor records and the current immutable cap table export.
• Confirm the OTP and password reset flow; describe fallback channels and rate limits.

Advanced strategies for investors

• Embed security milestones in term sheets: require specific remediations (DMARC p=reject, SBOM delivery, drift monitoring) as pre-close or tranche conditions.
• Use escrowed attestations: mandate third-party verification (attestation reports) for high-risk assets like models and identity systems, delivered to an escrow agent.
• Continuous verification: leverage automated monitoring (DMARC, certificate transparency, CVE feeds) during the post-term-sheet period to detect regressions.
• Technical escrow for critical models: for strategic investments where core IP is an ML model, negotiate a mechanism ensuring access to model artifacts or reproducible training pipelines under defined conditions.

Practical takeaways — what to require today

• Make DMARC enforcement and workspace SSO+MFA a gating item for any company handling investor PII.
• Require L2+ identity proofing with immutable audit logs for investor onboarding and founder verification.
• Insist on SBOMs for product deals and a patch cadence with MTTR metrics for critical CVEs.
• Demand model inventories and evidence of drift monitoring and adversarial testing for products using AI.
• Confirm CRM auditability and immutable cap table exports before funds are wired.

What to automate in your diligence workflow

Automation reduces check time and false positives. Start with:

• Automated DMARC/SPF/DKIM checks during intake
• API-based vendor evidence collection (SOC 2, pen test repos)
• SBOM and SCA scanning integration into CI/CD review
• Model registry checks via API for model inventory & model cards
• CRM audit-log ingestion to verify change history programmatically

Final note — deals are won (or lost) by operational discipline

Investors have always bet on teams. In 2026, operational discipline — secure comms, strong identity proofing, rigorous vendor patching, defensible AI practices, and trustworthy CRM data — is the measurable signal that the team can execute safely at scale. Use this checklist to convert intangible trust into verifiable evidence and speed your path from interest to close.

Call to action

Want a ready-to-run version of this checklist as a downloadable intake form or integrated into your deal-CRM workflow? Contact our diligence team to get a customized tech-risk scorecard, or book a security review for a target company. Reduce friction, quantify risk, and close with confidence.

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