When red flags cost green

The term sheet is ready, the pitch deck was convincing, and the founder is charismatic enough to light up the entire Zoom call. You’re a venture capitalist preparing to invest in a Seed or Series A round, and everything seems in place.

But at madewithlove, we’ve seen what happens when excitement overshadows engineering reality. Our team of CTOs in residence, software engineers, and technical leaders conduct audits for startups and scale-ups on a weekly basis. We’re often called in for technical audits just before deals are signed. And let’s just say… not all cap tables are backed by scalable codebases.

Whether it's Seed-stage scrappiness or Series A acceleration, the concerns tend to repeat like a buggy CI pipeline. Across dozens of due diligence projects, we've noticed the same questions come up, whether you're backing a promising seed-stage MVP or a Series A company gearing up for growth. Is the team ready to scale? Can the tech handle success? Is the roadmap more sci-fi than software?

Here are the five most common red flags that VCs, and frankly, anyone serious about tech due diligence, should watch out for. Spotting these early could save you a headache, a down round, or worse, a write-off.

1. The team is too small to scale, and too big to stay aligned

You’d think a lean team is a green flag. Until you realise that the “lead engineer” is also the customer support line, the DevOps person, and sometimes the only one writing tests (if any exist).

On the other hand, we’ve seen bloated teams where half the engineers are building features no one uses while the other half are rebuilding the CI/CD pipeline for the fourth time. The ideal team size will reflect the needs and resources of the company at a given moment. If the company is at an early stage, it may benefit more from fewer developers who are more experienced and able to make an impact quickly. On the other hand, investing in junior talent can be cheaper and a pathway to growing your culture. For founders, prior experience can compensate for other organisational gaps.

An ideal team at Seed or Series A should be product-minded, pragmatic, and stable, but not padded. Scaling a team is not only about headcount but also about a healthy engineering culture with clearly defined responsibilities. When every developer is a silo or there is a low bus factor, scaling becomes a logistics nightmare or a risky endeavour.

Seed vs Series A

For seed teams, a small but well-balanced setup is acceptable, especially when there’s trust in an experienced founding engineer. We do, however, look for a team that is proactive about reducing the bus factor and, therefore, making efforts to create documentation about the product and decisions for later. Not every process needs to be in place, but only one person understanding parts of the product or infrastructure will raise concerns.

In our audits, we look at more than just the headcount. For Series A, we want to know if they have strong onboarding documentation, mature review processes, effective task assignment mechanisms, and established hiring processes. We also look at how they plan to build upon these. A small team with high standards often beats a larger team operating chaotically.

2. The technology “works”… but only just

It runs. You can sign up. Sometimes the email even arrives. Sounds familiar?

A functional demo is a low bar. We often audit startups where the codebase is held together with global variables and hope. Environments are not isolated. Secrets are exposed. Infrastructure is manual. Logs? Optional. Monitoring? A Slack channel called #outages.

Here’s what a VC should look for: a codebase with maintainable, testable, deployable infrastructure. Without that, technical debt is a silent killer of momentum, morale, and market entry. Of course, there should also be a plan in place for tackling the technical debt, for example allocating 15-20% of each sprint to paying down the technical debt.

In general, we will look to see how fast someone is able to understand the system and be productive in it. For Series A, we will look more deeply at the code quality and practices around it.. For Seed companies, do focus on the MVP and ensure you find market-fit while solving the basics and have good code practices and tooling in place.

Seed vs Series A

Accelerating at Seed stage and focusing on features to attract users in pursuit of product-market fit may knowingly incur technical debt, leading to faster iterations and simplified architectures. We are more lenient at this stage, especially when the founding team demonstrates awareness of these trade-offs and has a realistic plan for addressing them as the company matures. By Series A, there should be a solid foundation. Manual deployments, weak testing practices, and non-existent observability at that stage should raise serious concerns.

3. A roadmap full of dreams, not deliverables

If your startup’s entire roadmap fits on one pretty slide, be afraid. And if it does not exist at all, be very afraid.

We’ve seen companies with zero structured backlog, unclear ownership of product direction, or a to-do list driven by whatever the loudest customer requested last week.

In our audits, “no structured roadmap” is one of the top concerns, even at Seed. A good product roadmap shows priorities, trade-offs, and technical reality, not just vague aspirations. If a team can’t answer how they’ll build what’s next, they probably won’t.

Seed vs. Series A

At Seed, having a rough but coherent direction is often enough. But a Series A team should already have internalised a structured, collaborative planning process. By then, we expect detailed backlogs, clear ownership, prioritisation and estimation mechanisms.

We’ve audited seed-stage teams that had no visible planning process: no roadmap, no triage rubrics, and no ownership. At this stage, that’s not just immature; it’s risky. 

4. It’s all features, no foundation

Every engineer dreams of building cool new features. But if that’s all they do, your startup might be what we call a “feature factory.”

We’ve seen codebases where technical debt goes untouched for years. No refactors. No scalability planning. Just a mad dash of sprints, shiny on the surface, messy underneath.

What’s missing? Time for clean-up. Budget for reliability work. Strike a balance between shiny features and invisible infrastructure. If nobody’s improving the system, you’ll soon have a system no one wants to touch.

Seed vs Series A

We understand that at Seed, the team will be shipping rapidly while they find their market fit, meaning features are often prioritised over perfection. By Series A we look to see a clearer plan on how technical debt will be addressed, this is to ensure that scalability won’t be impacted. The team should show us awareness of scope management and have processes to balance new features with improvements. If a company claims they have no technical debt, this is often a red flag, demonstrating a lack of awareness. 

Occasionally, we find Series A companies carrying technical debt because of fast market traction, and we let it slide if there’s a clear plan to address it and dedicated engineering capacity to do so. Seed-stage teams don’t always have that luxury. If a Seed startup has already accumulated debt without the means or mindset to fix it, it's a deeper concern.

5. The solution could be rebuilt over a long weekend

This one’s subtle but deadly: the tech does what it should, but so could a junior freelancer after three energy drinks.

When a product is easily reproducible, it’s a sign the real moat isn’t there. That’s not just a problem for the engineering team. It’s a strategic risk. When this is more the case, we look for deep domain knowledge and a proven market fit.

Also: beware the AI veneer. A chatbot slapped on top of generic CRUD doesn’t mean you’re an AI startup. We’ve seen too many cases where “AI-powered” is just OpenAI API with a prompt and a prayer.

We’ve flagged solutions where logic lived entirely in the frontend, where no defensive patterns were in place, or where the backend was stitched together from tutorials and duct tape. If the market heats up, competitors will move faster and smarter.

A robust architecture should be hard to copy and easy to evolve.

Seed vs Series A

At Seed stage, although we expect some level of differentiation, we understand that teams are still discovering product-market fit and their core idea is evolving. By Series A, the company should deeply understand their market fit and have established research practices. There should be concrete evidence that reproducing their product would require significant effort, and the company should possess in-house knowledge that creates meaningful barriers to entry.

Final thought: no audit is perfect, but ignorance is expensive

To be clear: red flags don’t mean “don’t invest.” But they do mean: ask better questions, dig deeper, and plan support wisely. Technical debt can be tackled. Roadmaps can be fixed. But you can’t reverse a bad investment without regrets (and write-offs).

At madewithlove, we’re here to help you make those calls with clarity. Our technical audits are designed to cut through the fluff and show you what’s really under the hood.