On May 13th we hosted a conversation on AI-powered due diligence. We shared what we’ve learned from 50+ product and tech DDs. You shared what’s shifting in your own work. And together, we touched on what an AI-supported DD process could look like in the future. And how it will be able to benefit both investors and founders alike. We were especially happy to see so many forward-thinking investors and DD professionals are open to reimagining the process for a faster and more transparent one.
If you’re curious about where the process is headed, it’s worth a watch. Here are a few takeaways from the session:
AI accelerates and deepens due diligence by analyzing vast, fragmented data, enabling more informed investment decisions even with limited time or expertise.
Structured prompt engineering and RAG systems enhance consistency and accuracy in analyzing large document sets, reducing the risk of oversight or hallucination.
Agentic workflows and AI tools like FlowWise, GitHub MCP, and Amazon Q enable automated, scalable technical assessments across infrastructure and codebases.
This webinar session is part of our AI applied in due diligence series. Lab08 shares learnings and data from tech due diligence collaborations and data across due diligence processes from our AI-platform Vicinity.
We introduced Vicinity to investors and founders at the Nordics’ premier startup event – TechBBQ. The event hosted over 8500 attendees, including 350 speakers, 3500 startups, and 1300 investors. Given the magnitude of the event, making the most of networking can be a significant challenge. The necessity of preparation and the concentrated effort to identify the right connections makes this a time-consuming and complex process.
Committed to solving the networking challenge, we collaborated with the TechBBQ team to employ Vicinity in providing a tailored shortlist for each participant, based on their specific criteria.
Founders had the opportunity to showcase their businesses more effectively, guided by Vicinity regarding commonly asked questions by investors. The process starts with an upload of their pitch decks and providing detailed information about their startup’s specifics and investment needs. By doing so, founders received comprehensive startup profiles enhanced with data from trusted resources utilized by Vicinity, including financial information, ownership details, team structure and skillset, and more.
Investors could swiftly share their investment thesis via a chat interface, initiating all necessary questions to build their investment criteria, thereby receiving better recommendations. This information was utilized by our AI-powered matchmaking engine to suggest startups that are closely aligned with their specific investment focus. Investors were able to review these recommendations, delve deeper into startup profiles if desired, and be better equipped with information when meeting founders to maximize their time. Founders received exposure to potential investors who may not have been on their radar previously. Investors got a more focused look on the landscape of founders, attending the event.
Source: TechBBQ
The results followed: 300 founders seamlessly created startup profiles uploading their pitch decks to Vicinity and 250 investors submitted their investment thesis. The AI helped generate more than 170 meeting invites during the event, and likely more new connections being forged offline, out of reach for our tracking, as well.
Given the ambitious plan to develop what became Vicinity, and release it right at a major event like TechBBQ, we’re very happy with the results. We’re also very grateful for the trust the TechBBQ team had in our ability to deliver on such an important challenge in a short amount of time, and appreciate all the hard work their team did in making this a success together with us.
Just as important as the results are the learnings of this journey.
Learnings from utilizing AI in Vicinity
Some of the challenges we tackled along the way included ensuring that, when users interact with the AI chat (i.e., free text format), we gather the correct data in the appropriate format. This required training the AI to detect what information is crucial, how to extract it with apt questions, and how to visualize it correctly. This process called for extensive testing and experimenting with various potential cases.
We’ve had a few curious, even amusing cases while preparing our chosen AI model to be utilized for the use cases in Vicinity. For example, upon asking vital questions to collect data about a startup or investment criteria, when the user responded with ‘thank you’ to conclude the interaction, the AI interpreted this as an approval to ask a few more questions. In another scenario, when an investor specified ‘industry agnostic’ as part of the investment criteria, the AI recommended companies practicing an industry-agnostic approach, instead of companies from diverse industries. At times, the AI even initiated interactions on its own – posing and answering its own questions. Needless to say, all of these cases led to in-product improvements and learnings for better prompt engineering.
Onboarding founders and investors in Vicinity for TechBBQ begins with our AI chat, which gathers information to improve their representation and recommendations.
To provide more precise recommendations, we asked investors to define the essential investment criteria, as well as those of lesser importance for them. This was a crucial step to present investors with the startups that aligned closely with their specific criteria, as it allowed us to perfect the prompts and deliver recommendations fitted for investors’ interests and needs.
Although challenging at times, this was an enlightening experience, which contributed to the discussion about training and fine-tuning our own AI model, incorporating our knowledge about the dynamics between startups and investment organizations, their needs, and shortcomings.
What is the future plan for Vicinity?
Vicinity continues to live as a standalone product outside the scope of TechBBQ as an AI powered analyst for investors. We have moved the product to a closed beta phase, where we have invited a selected group of investors from the Nordics, Baltics and Benelux to help shape this tool to better meet their needs and those of their peers.
We expect to be ready with an enhanced version of Vicinity for all investors by the end of this year. At the same time we will be working with TechBBQ to create an improved version for founders making the networking experience even better for next year’s event.
How can I stay updated on Vicinity’s progress?
Stay updated with Vicinity’s progress by following us on social media and visiting www.myvicinity.ai for updates. If you’re interested in joining our closed beta you’re welcome to reach out to us at contact@myvicinity.ai
Diliana is one of Lab08’s first employees. She was previously responsible for the company’s recruitment and branding activities. Currently, she is focused on expanding Lab08’s customer portfolio and onboarding clients to Lab08’s own product, Vicinity.
Be sure to follow us on social media to receive updates about other similar content!
As the end of 2022 is approaching, we’re looking back and doing our retrospective of all the challenges and achievements. We’re proud to say that this year brought growth and many positive emotions to all of us. One of the core team practices that has contributed to this is the Lab08 pop-up office initiative. We were lucky enough to enjoy three editions of it this year, and we are currently in preparation for Lab08 Winter Office 2022/23. Let us tell you more about this important component of Lab08’s culture.
Lab08 is an aspiring software company, whose remarkable achievements and happy customers come from the effective collaboration between smart, open and competent people. Lab08’s company culture relies on teamwork, cooperation and friendship. With the pandemic, our culture was at risk, and we had to come up with a solution to revamp it. Back in 2021, we started researching options for great locations near the seaside and in the nearby mountains, where employees can spend several working weeks, being close to nature and in a new and different environment. What was initially just an idea for testing became one of the most enjoyable and anticipated company events. A core cultural practice of Lab08.
A pop-up office is essentially an event held during the course of one or more weeks. All employees can choose personally convenient days to work from the designated space. In addition to ensuring that every employee has a seat in the coworking place, the company covers accommodation, breakfast & lunch, as well as outdoor activities of choice (e.g. skiing, parasailing, etc.).
We believe that the pop-up office initiative allows us to have a natural way of team building, stimulating people to work together and in addition – it offers a noticeable increase in creativity (key to ideation and problem-solving). Especially during the pandemic times, the pop-up office initiative was one of the very few opportunities to refuel the team spirit after months of isolation and harmed company culture. The Lab08 pop-up office initiative presents a change of environment, in a great place close to nature. Thus, the team receives a boost of motivation, coming from the saturation of positive emotions and experiences. And you know what? It’s one of the most productive periods for us. We actually do work and return with accomplished tasks, aside from great memories.
By introducing the pop-up offices, we gather people from different teams, who share experiences and create memories together. We believe that this allows for improved communication, more trust and consequently – better collaboration in work.
The very first pop-up office took place in July 2021 at Beach Hub Kavatsi. This was a three-week event with fully covered accommodation expenses, breakfast and lunch, as well as costs for recreational and fun activities for the team. The company also organized a soft skills training, held by Tochka 2, which aimed to improve teamwork, awareness of strengths and points for improvement in team communication. The training was a blend of new technique acquisition, as well as a fun interactive game, which has also contributed to the overall pleasant experience during the pop-up office.
In February 2022, Lab08’s office was the cosy lobby corner of the Moreni hut on Vitosha mountain. As the event was held in winter, we decided to book a nearby location, in order to make transportation easier. The team was able to enjoy working from the mountain for a period of 2 weeks. Ski and snowboarding activities, as well as soft skills training by ShiZi Impro Club, were organized for the team to enjoy. The training helped us improve our active listening skills, as well as the ability to clearly communicate ideas, avoid ruminating over mistakes and dwell on challenges, instead of taking action and contributing to the team’s work process.
We learned that by regularly having pop-up offices, our team’s motivation remains high and this greatly benefits performance, as well as contributes to the company culture. That’s why we organized another edition of the initiative at the end of June 2022 and this time, our office was the Septemvri Hut on Vitosha. Our workdays were accompanied by the summer sun, fresh mountain air and delicious food. Carpooling to the designated location was also a big part of the experience and definitely contributed to the team-building experience. You’ve all heard of the proverb: ‘All work and no play makes Jack a dull boy.’ That’s why our chosen activity for this pop-up office was taekwondo training. Several sessions took place in the surrounding outdoor sites. It was not only fun but a healthy thing to do. We all enjoyed the recharge that this activity provided, but also the beauty of the nature around us. Of course, summer and the sea go together, so despite the welcoming nearby mountain, we couldn’t say no to another opportunity to visit the seaside.
In July, Lab08 moved its office to X Challenge Park in Tsarevo and this event was quite significant – it was the second time we organized a beach pop-up office. This meant that our initiative had become a tradition. What was even more exciting – this was the highest-attended event of the sort since the beginning of the Lab08 Pop-Up Offices! Picture this – you spend the first half of your workday in the coworking zone of the park, where you enjoy great coffee and hide from the raising temperatures in a cosy air-conditioned spot. When it’s time for lunch, you and your team have a nice walk to the seaside, where you enjoy local food and a pleasant view of the sea. When you get back, the remaining part of the workday passes by so quickly (yet productively ;)) that it’s time for you to get in your bathing suit and say a proper hello to the sea. In the evening, you get back to the park, where you have a nice outdoor dinner and a movie night together. And during all of this, we bond and become closer as a team. You imagine why this has become a tradition, right?
In Lab08, we aim to do things when we see real value in them. It’s not just about doing something that’s trending and modern. The Pop-Up Office initiative keeps on giving, and its benefits are visible to the company and to each team member individually. That’s why we plan to keep on going, and the preparations for this winter’s edition are currently in progress! Each time we aim to do something different and in a better way, so stay tuned to learn more about what we’ve planned 🙂
All in all, the Lab08 pop-up office initiative aims to bring new opportunities for the team to bond and gives a boost of positive emotions and new experiences. We believe that this will greatly benefit our culture and the products of our work long-term.
All tech ventures raising capital or looking to exit their business must undergo technical due diligence (Tech DD). As with commercial due diligence, this will be towards the end of an extended funding or M&A process, and it might seem like a formality just before signing the dotted lines. However, there is excellent reasoning why VCs require a tech DD. This is the first time they will open the hood to your engine room, and there is a real risk of issues appearing that could lead to renegotiations about the agreed valuation. In the worst cases, we could be looking at dealbreakers.
At Lab08, we have both been the subject of tech DDs, while we have been performing tech DDs on behalf of VCs looking to invest in tech-based scale-ups. In this article, we will share our framework for conducting a tech DD and what you should be aware of if you engage in one at any point.
What is technical due diligence?
Tech DD includes an evaluation of the technical strategy, the team, the development process, product and code quality, and the system architecture and security.
Why do VCs want this?
For any tech venture, the actual technology must align with the demand for commercial performance and growth targets. A legacy (old) platform or product requires significant investment in competencies and time to modernize, which might not be accounted for in the presented investment plan. VCs are aware that legacy platforms come with slower development and higher turnover in the product team. Also, significant security issues might lead to a data breach or similar risks that VCs are unwilling to take.
How to do technical due diligence?
Technical due diligence requires access to the company’s data and technical setup and management, including the CPO and the CTO. It will be performed by people with expertise in all areas relevant to the tech DD mentioned above. Typically, tech DD takes 2 to 4 weeks and will result in a rapport indicating potential risks in the above-mentioned areas.
Lab08’s framework for technical due diligence
There are multiple ways to go about a tech DD, but any process will cover roughly the same topics. The big difference is how deep you go in each area. A “light” tech DD could be based on a few interviews with the CTO and a high-level architecture review. A proper tech DD will thoroughly examine the team, processes, code, and security to uncover potential hidden red flags in the software and infrastructure.
In Lab08, we are doing proper tech DDs, and we have developed a framework to cover and rate all the relevant topics in a way that is useful for investors and the subject of the tech DD.
Product and tech strategy
Current product goals in alignment with business strategy and plans to scale?
Strategic roadmapping connected to strategic planning in the business?
Are the right technologies in place to scale as planned?
Leadership and team
Are the current tech and product leadership in place to execute the strategy?
Does the hiring road map reflect the current plans to scale the business?
Is the hiring plan based on realistic timing and cost assumptions?
Product Quality
Is the code written in a well-structured and documented way?
Is legacy code at the expected level compared to the age of the product?
The level of automation, code coverage, and ability to catch bugs upstream?
Ways of working
Ability to deliver quality on time to meet the roadmap and strategic goals?
Are well-established processes for release and sprint planning in place?
Effective setup for handling bug backlog and feedback on the product?
Infrastructure and security
How are deployment processes compared to the current state of the business?
Scalable infrastructure to accommodate the business and product strategy?
Any major security breaches that need to be addressed?
Evaluating a tech due diligence
All tech companies have issues to deal with, and this should be no surprise to investors! The most critical output is to understand if there are unknown red flags and if the right plans are in place to address the issues.
The best case is if the issues that have been shared during the investment process are already known. However, suppose the critical problems are new to both the subject of the investment and the investor. In that case, it could lead to a discussion about a need to increase investment in R&D to solve the issues or potentially a discount in valuation if the problems are severe enough.
How we evaluate a company
There is not only one way of presenting the conclusions of tech DD; this is just as much an exercise of making the findings easily accessible and understandable for the target audience. In Lab08, we are doing tech DDs for VCs and investors, and we have created a dashboard to quickly understand the conclusions for a non-technical target audience.
Example of the model used in our executive summary to summarize findings.
Each area in the due diligence is scored on a scale from 1 to 5 based on multiple interview sessions with the CTO, interviews with all team members in product and tech, code review and desk analysis of the shared information and a Penetration Test.
The Baseline score is created by evaluating the current situation compared to the realistic expectations for the product and tech operation in the given growth scenario. By comparing the actual situation with the baseline, we can recommend which areas are in the most urgent need of attention to support the plans for scaling the business.
In an actual due diligence report, each of the five areas will be analyzed and described individually for the investor to have as many details as desired. Also, for the subject of the tech DD to have an actionable plan to work on post-investment.
In our experience, this executive summary combined with the more detailed report is what investors need to have the necessary information and confidence when investing in a tech start. This is how to avoid surprises after investing, which is in no one’s interest.
Get in touch to learn more
We hope that this has helped you to get a fundamental understanding of tech due diligence. What it is, and why it is needed. You are always welcome to reach out to us if you are an investor needing a partner doing tech DDs on your behalf or if you are a tech company preparing for future due diligence.
As CEO, Rasmus scaled Komfo from 0 to 70 employees, delivering a market-leading SaaS B2B solution for social media. Sold it to Sitecore.
Co-founded Lab08 on the belief that while we don’t have all the ideas of how to solve tomorrow’s challenges, we know how to scale the technology powering these ideas.
Be sure to follow us on social media to receive updates about other similar content!
You are probably familiar with the term “Web3”, which many refer to as the next stage of the internet. Around the tech industry – and in many others – exploring new alternatives is always tempting. With something as exciting as Web3, it is almost like Garfield trying to keep his hands away from freshly baked Lasagna. Simply seems impossible.
All hype or actually useful?
It is essential to ask whether this new, shiny tech solves a problem for you or if you are making your business model more complicated. While today’s hype can easily be the future of tech tomorrow, your business might be better off sticking to the traditional ways of the internet. Therefore, we always encourage our peers to look at Web3, blockchain, etc., as a platform to solve customer needs rather than pinning it as a solution before fully getting to the core of the problem.
Our recommendation will always be to identify the need based on user insights and then look at the tech and platform solution.
The idea around Web3 is that it is based on decentralized peer-to-peer networks taking place on the blockchain, where applications are distributed across computers participating in a specific network. A significant amount of the spotlight comes from the sphere of crypto, NFT, and the metaverse, consistently bringing headlines for all the right – and the wrong – reasons. However, by looking at blockchain technology and what this can do, we begin to uncover real-world problems where blockchain can solve actual needs.
We have done this with Kollektiv, an endurance sports training platform leveraging deep-tech to help world-class coaches create personalized training plans for athletes like you and me.
Providing total ownership to personal trainers
When we first began talking to Kollektiv, they came to us with a revolutionary vision to democratize personal training and make excellent coaching available for everyone. They had identified a need to break free of traditional personal training platforms such as social media and instead allow trainers to form their unique communities. One, where pro athletes’ followers could benefit directly and exclusively. The pro athletes act as coaches and own their community by doing so. In this case, blockchain turned out to be the obvious choice of technology.
Leveraging blockchain to challenge real-world problems
We concluded on tech stack during a discovery workshop in Copenhagen, bringing everyone together for three days of problem identification and solution exploration.
Fundamentally, we wanted to dive into how to solve three core needs.
Empower personal trainers and provide 100% ownership of their community
Sustain the incentive to keep athletes on their path
Ensuring transparency by enabling proof of pro-athletes coaching abilities
Kollektiv’s Discovery Workshop @Lab08’s office in Copenhagen
As mentioned, we discovered that the blockchain would provide us with the right “out-of-the-box” technology to meet all our requirements. For Kollektiv, blockchain and Web3 went from hype to a problem-solving platform.
To empower personal trainers and transition them from pro athletes to coaches, we leverage the power of Decentralized Autonomous Organization (DAO) to help them form their personalized communities. The DAO allows complete ownership and enables them to build and manage their communities in a democratic and censor-free fashion.
Athletes will be granted a utility token when getting access to the network. The token allows several functionalities outside of simply being your ticket to play. It obtains voting rights for the DAO network and enables you to purchase community-related offers and services. Additionally, we have implemented a new method of motivating clients by establishing a “train-to-earn” token as an incremental payment system. The setup allows users to earn money back as they progress in the training plan. The more you train, the more you earn back on your initial cash commitment.
To validate the coaching skills of pro-athletes, the “train-to-earn” token works as a decentralized ledger to support past performance and experiences with the individual trainer. It serves as an anonymized and immutable database containing all athletes’ prior performances in the trainers’ unique community. This makes it possible for new potential athletes to make informed decisions based on past results, completion percentages, etc., which makes picking a personal trainer much less of a shot in the dark.
Continuing down the path with Web3
Together with Kollektiv, we will continue to explore, define, and validate the individual functions and capabilities in the Web3 solution and how these will interact. We will be focused on enabling the DAO communities to flourish and leveraging the “Move to earn” token in the best possible way, e.g., adding further utility to the token by making it redeemable for physical goods and services relevant to athletes.
If you want to learn more about Web3, blockchain, or how we might be able to help you understand more about the topic, please reach out. We’re happy to discuss this further over a coffee to see how we can help address your needs.
Lachezar Blagoev is the Head of Product Management at Lab08. His responsibilities include defining product roadmaps, managing backlog, and coordinating development efforts in order to ensure that milestones maximize the value we bring to all of our customers
He is acting as the link between customers and business by representing the user’s perspective
Lachezar has made essential decisions regarding all aspects of a product strategy including but not limited to UX, technical approach, business purpose, and compliance with regulations
Be sure to follow us on social media to receive updates about other similar content!
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. If you continue to use this site, we will assume you agree with it. Read More
This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
