---
title: "Technical Due Diligence"
description: "Is your AI-built platform worth investing in? A guide for CTOs and investors."
lastUpdated: "2026-06-23"
canonical: "https://anvilstack.eu/en/insights/ai-prototype-due-diligence"
---

> Sitemap for agents: https://anvilstack.eu/llms.txt

# Technical Due Diligence

25% of Y Combinator's W25 batch have codebases that are **95% AI-generated**. ([TechCrunch: 25% of YC W25 have 95%+ AI-generated codebases](https://techcrunch.com/2025/03/06/a-quarter-of-startups-in-ycs-current-cohort-have-codebases-that-are-almost-entirely-ai-generated/)) What counted as a competitive edge a year ago is now a risk factor in technical due diligence (TDD): AI-generated code contains security vulnerabilities in 45% of cases, is rarely tested, and builds up technical debt that can mean **as much as a 20% discount** at valuation. For CTOs and investors evaluating AI-built platforms, a new set of review criteria applies.

- **45%** – of AI-generated code tasks contain security vulnerabilities (Veracode 2025)
- **40%** – of agentic-AI projects will be scrapped by the end of 2027, per Gartner
- **40%** – more exposed secrets in repositories using GitHub Copilot (6.4% vs. 4.6%)
- **Up to 20%** – valuation discount from technical findings in due diligence

## Why the pace of AI is changing technical due diligence

The speed at which AI tools turn out working code has created a new problem: **platforms look convincing in the demo but are technically fragile.** YC CEO Garry Tan captured the trend in a single line: "The age of vibe coding is here." ([Garry Tan: The age of vibe coding is here (2025)](https://x.com/garrytan/status/1897303270311489931)) A TDD audit surfaces exactly the shortcuts a demo never reveals: missing tests, exposed secrets, inconsistent architecture.

Gartner forecasts that more than **40% of all agentic-AI projects will be scrapped by the end of 2027** – driven by escalating costs, unclear business value, or inadequate risk controls. ([Gartner: 40%+ Agentic AI Projects Canceled by 2027](https://www.gartner.com/en/newsroom/press-releases/2025-06-25-gartner-predicts-over-40-percent-of-agentic-ai-projects-will-be-canceled-by-end-of-2027)) That is why investors now scrutinize AI-built platforms more closely: test coverage, secrets hygiene, and architectural consistency, before the term sheet hits the table.

## Red flags: what stands out in AI-generated codebases

### No test coverage

AI tools generate functional code, but almost never the tests to go with it. A platform without unit tests, integration tests, and E2E tests is flying blind – no investor accepts that as production-ready. In due diligence, test coverage below 60% is an immediate red flag.

### Hardcoded secrets and API keys

In 2025, more than **28.6 million new hardcoded secrets** were discovered in public GitHub commits – a 34% increase year over year. ([OECD.AI: AI Coding Assistants Drive Surge in Secret Leaks](https://oecd.ai/en/incidents/2026-03-17-2273)) Repositories with GitHub Copilot active show a roughly 40% higher rate of exposed secrets (6.4% vs. 4.6% of all public repositories): API keys, database passwords, and tokens sitting directly in the source code. ([GitGuardian: GitHub Copilot and the risk of leaked secrets](https://blog.gitguardian.com/yes-github-copilot-can-leak-secrets/))

### Missing error handling

AI-generated code focuses on the happy path. Edge cases, error handling, retry logic, and graceful degradation are systematically absent – which leads to cascading failures in production.

### Inconsistent architecture

> **Warning:** AI models optimize **file by file**, not system-wide. Each file works in isolation, but the overall architecture is incoherent: divergent patterns, duplicated logic, contradictory abstractions. More than 5,600 analyzed vibe-coded apps revealed over 2,000 vulnerabilities and 400+ exposed secrets. ([Escape.tech: 2,000+ vulnerabilities and 400+ secrets across 5,600 vibe-coded apps](https://escape.tech/blog/methodology-how-we-discovered-vulnerabilities-apps-built-with-vibe-coding/))

### Dependency bloat

AI models add dependencies without checking what is already in place. The result is dozens of redundant packages and outdated versions piling up – a bloated supply chain that widens the attack surface.

### No CI/CD pipeline

Without continuous integration, there are no automated checks – no lint enforcement, no security scans, no automated deployments. Every release is a manual risk.

### Missing access control

AI agents routinely forget to wire authentication middleware into downstream components. The result: individual routes or API endpoints are left unprotected, even when a login page exists. ([The Hacker News: AI Code Expands Attack Surface (2026)](https://thehackernews.com/expert-insights/2026/03/the-real-problem-isnt-that-ai-cant.html))

## The valuation impact: as much as a 20% discount

Technical debt feeds straight into company valuation. Technical findings in due diligence can knock **as much as 20%** off the valuation, and roughly 60% of deals fall through over problems that only surface in the tech review. ([Sphere: Technical due diligence can cut valuation by up to 20%](https://www.sphereinc.com/blogs/technical-due-diligence-checklist-startup/))

| Criterion             | Production-Ready Codebase             | Vibe-Coded Platform                |
| --------------------- | ------------------------------------- | ---------------------------------- |
| Test coverage         | > 70% with CI enforcement             | 0–5%, no automated tests           |
| Security scans        | SAST/DAST integrated into CI/CD       | No scans, no audits                |
| Secrets management    | Vault/ENV, no secrets in code         | Hardcoded API keys in .env files   |
| Architecture          | Consistent patterns, documented       | Incoherent, generated file by file |
| Dependency management | Automated updates, SBOM               | Outdated packages, no tracking     |
| Error handling        | Retry logic, circuit breaker, logging | None – happy path only             |
| Valuation impact      | Full valuation                        | Up to 20% discount                 |

A worked example: three additional senior engineers over twelve months, at a fully loaded headcount cost of €110,000–180,000 per person, amount to roughly **€330,000–540,000** in extra spend that investors deduct from the valuation.

## What a TDD report must contain

A professional technical due diligence report for AI-built platforms covers:

1. **Architecture assessment:** System architecture, data model, API design, consistency of patterns
2. **Code quality analysis:** Automated scans (SonarQube, Snyk), technical debt quantified
3. **Security audit:** SAST/DAST results, secrets scan, dependency vulnerabilities, OWASP Top 10
4. **Infrastructure review:** Deployment process, monitoring, backup strategy, scalability
5. **Team assessment:** Technical capability, documentation, development processes
6. **Compliance check:** GDPR, NIS2, data residency, supply chain security
7. **Risk assessment:** A prioritized list with estimated remediation effort and timeline

[Cleveroad: Technical Due Diligence Key Elements 2025](https://www.cleveroad.com/blog/technical-due-diligence/)

## How to make your codebase audit-ready

> **Tip:** The best preparation for due diligence starts **months before the funding round**. Around 30% of failed M\&A deals collapse over technology integration problems – often a consequence of unvetted tech stacks. ([DextraLabs: Software M\&A Technical Due Diligence 2026](https://dextralabs.com/blog/software-ma-technical-due-diligence/))

**Quick wins (weeks 1–2):**

- Run a secrets scan and strip out every hardcoded credential
- Dependency audit: run `npm audit` / `yarn audit` and apply critical updates
- Stand up a basic CI/CD pipeline with linting and security checks

**Short term (months 1–2):**

- Build out a test suite: cover critical business logic at minimum
- Produce architecture documentation
- Implement monitoring and logging (Grafana + Prometheus)

**Medium term (months 2–4):**

- Security hardening: RBAC, MFA, rate limiting
- Infrastructure as code (Terraform) for reproducible deployments
- Establish a performance baseline and run load tests

In a free intro conversation, we clarify your starting point and goal; the Analysis then assesses your AI-built platform for TDD readiness – from security findings to architectural weaknesses. We deliver the full build at €6,000 per month over 6 months (€36,000 total): a working app on EU-sovereign infrastructure.

[Book a no-obligation intro conversation](https://anvilstack.eu/en/contact)

## Frequently asked questions

### What is a technical due diligence?

A systematic review of the entire tech stack – architecture, code quality, security, infrastructure, and team capability. Investors increasingly bring in external TDD reviewers to assess technical health ahead of a funding round.

### How does technical debt affect valuation?

Technical findings in due diligence can knock as much as 20% off the valuation, and roughly 60% of deals fall through over problems that only surface in the tech review. A 12-month backlog that takes three additional senior engineers to clear quickly adds up to several hundred thousand euros.

### What are the most common red flags in AI-generated codebases?

No test coverage, hardcoded secrets and API keys, missing error handling, inconsistent architecture, dependency bloat, no CI/CD pipeline, and missing access control.

### When should I make my codebase audit-ready?

Months before the funding round. Around 30% of failed M\&A deals collapse over technology integration problems, often a consequence of unvetted tech stacks. Quick wins (secrets scan, dependency audit) take 1–2 weeks.

### Is Gartner's forecast on AI project failure taken seriously?

Yes. Gartner expects more than 40% of agentic-AI projects to be scrapped by the end of 2027. For due diligence, the implication is clear: investors are scrutinizing more closely.

### Can AnvilStack help with TDD preparation?

Yes. The Analysis evaluates your codebase for TDD readiness – from security findings to architectural weaknesses; the initial consultation is free. We deliver the full build to a verifiable outcome at €6,000 per month over 6 months (€36,000 total).

## Sources

- [TechCrunch: 25% of YC W25 Startups Have 95%+ AI-Generated Codebases](https://techcrunch.com/2025/03/06/a-quarter-of-startups-in-ycs-current-cohort-have-codebases-that-are-almost-entirely-ai-generated/)
- [Garry Tan: The Age of Vibe Coding Is Here (2025)](https://x.com/garrytan/status/1897303270311489931)
- [Gartner: 40%+ Agentic AI Projects Canceled by 2027](https://www.gartner.com/en/newsroom/press-releases/2025-06-25-gartner-predicts-over-40-percent-of-agentic-ai-projects-will-be-canceled-by-end-of-2027)
- [Veracode: GenAI Code Security Report 2025](https://www.veracode.com/blog/genai-code-security-report/)
- [OECD.AI: AI Coding Assistants Drive Surge in Secret Leaks on GitHub](https://oecd.ai/en/incidents/2026-03-17-2273)
- [Escape.tech: 2,000+ vulnerabilities and 400+ secrets across 5,600 vibe-coded apps](https://escape.tech/blog/methodology-how-we-discovered-vulnerabilities-apps-built-with-vibe-coding/)
- [GitGuardian: GitHub Copilot and the risk of leaked secrets](https://blog.gitguardian.com/yes-github-copilot-can-leak-secrets/)
- [The Hacker News: AI Code Expands Attack Surface (2026)](https://thehackernews.com/expert-insights/2026/03/the-real-problem-isnt-that-ai-cant.html)
- [Sphere: Technical due diligence can cut valuation by up to 20%](https://www.sphereinc.com/blogs/technical-due-diligence-checklist-startup/)
- [Cleveroad: Technical Due Diligence Key Elements 2025](https://www.cleveroad.com/blog/technical-due-diligence/)
- [DextraLabs: Software M\&A Technical Due Diligence 2026](https://dextralabs.com/blog/software-ma-technical-due-diligence/)
- [LeadDev: How AI Generated Code Accelerates Technical Debt](https://leaddev.com/technical-direction/how-ai-generated-code-accelerates-technical-debt)
- [HackerNoon: The Vibe Coding Hangover](https://hackernoon.com/the-vibe-coding-hangover-what-happens-when-ai-writes-95percent-of-your-code)