Identifying hidden risks before they compromise your investment
In technology due diligence, it’s common to encounter products that appear mature, well-resourced, and highly functional—only to discover that they are fundamentally unscalable. They’ve been built with breadth, not leverage. Optimised for the demo, not for growth.
These products are overbuilt and underdesigned for scale. Recognising the signs early can prevent costly missteps for investors and acquiring teams.
1. Feature Chasing Disguised as Value Creation
Some teams are obsessed by their competitors and the features they release, to the point of not having their strategic roadmap and operating a ‘me too’ strategy. Driven to compete, they build the same features as their competitors but don’t gain additional features. Leading to feature sprawl and tech debt.
A wide surface area of features can be misleading. When a product attempts to serve multiple use cases without a clear strategic anchor, it’s often a sign of reactive development.
Key indicators include:
- Roadmaps driven by client requests rather than product strategy
- Lack of prioritisation or usage metrics
- Difficulty articulating a core user journey
In one due diligence, we met a team of four overseeing 30+ products; they’d been following all their competitors’ releases and building in reaction. But if they’d kept to their core offering and differentiation it would have worked better for them as they’d have less to maintain.
Insight: A scalable product has focus. Overbuilt products often do too much—but none of it particularly well.
2. Engineering Complexity Without Strategic Gain
Technical architecture should reflect the stage and strategy of the company. When it becomes unnecessarily complex—often to showcase technical prowess—it introduces fragility.
Sometimes, there can be significant technical change, akin to open heart surgery. The giveaway is that the ‘transformation’ has taken 2-3 years without an end in sight.
Common patterns:
- Excessive microservices architecture without corresponding operational maturity
- Poor internal documentation
- Environments that are difficult to replicate or deploy
Diagnostic question: “What breaks if you double your users tomorrow?” If the answer is “everything,” scalability is likely compromised.
3. Talented team with everything in their head
A senior-heavy engineering team can deliver quality, but without a balanced structure, the result is often tightly held tribal knowledge and little room for scale.
This cannot be avoided with smaller teams, and we often meet teams that have been operating for more than a decade without any documentation. I don’t believe in documentation for documentation’s sake, but it is much more effective to write things down when making complex decisions. This is why Amazon uses its memo system, its’ six-pager’ system.
Look for:
- Minimal documentation
- Low contribution from new joiners / takes too long to get up to speed due to complexity.
- Poor separation of concerns between roles
Impact: When a product is reliant on a small number of individuals to function or evolve, it is inherently brittle.
4. Constant Delivery, Limited Adoption
Poor value attribution is one of the top issues we see. If a tech team cannot articulate this to us, as fellow ‘techies’ they are going to struggle to describe it to you as an investor.
Metrics on speedy delivery and velocity can be deceptive. Teams focused solely on feature output may fail to measure user impact or adoption. This can result in a bloated product where functionality outpaces real-world usage.
Warning signs:
- No clear product success metrics beyond release cadence
- High churn in new features
- Low feedback loops between product and customer
Remember: Scalability is not just technical—it is also about adoption efficiency.
5. Tech Debt Treated as Culture, Not Risk
Simple. Ideally you want your investment to be used on growth, not debt. You can read more here about how we calculate what the ratios are and why that’s important to you as an investor.
All startups accumulate technical debt. The issue is when that debt is unmanaged, undocumented, or glorified.
Flags include:
- Frequent rebuilds with no measurable outcome
- Lack of a tech debt register or remediation plan
- Hero culture celebrated over sustainable engineering practices
Translation: Burnout may not yet be visible, but the architecture already reflects it.
6. Poor Transferability
When you’re deploying money to grow a tech team, you want to know if the expanded team will be effective as soon as possible. One project we worked on took a new software developer just shy of a year to become effective and valuable. To make matters worse the CTO didn’t understand why it was an issue.
A scalable product is one that another team—internal or external—can inherit, understand, and evolve. Products that rely on contextual knowledge or are difficult to onboard indicate high operational risk.
Symptoms:
- No clear deployment pipeline
- Limited or outdated technical documentation
- Inconsistent coding standards across the team
Investor takeaway: You’re not just acquiring technology—you’re inheriting the ability (or inability) to scale it without key personnel.
Scalability Is About Leverage
True scalability is not just a function of engineering—it’s the product of aligned architecture, operational maturity, and cultural intent and at the core of that are the people in the team, their current capability and desire to grow.
Overbuilt systems may deliver short-term functionality, but without simplicity, clarity, and extensibility, they are unlikely to survive sustained growth or a leadership transition.
How We Help
At Beyond, we assess not just code, but the culture and decision-making that shape it. Our reports provide clarity, context, and commercial relevance—helping investors and founders align on what’s scalable and what isn’t.
