Helping Investors Make Better Deal Decisions
Trexin helped a private equity firm complete due diligence by quickly conducting a technology / IT assessment.
Successful venture capital and private equity placements are driven by rigorous deal discipline that guides the decision about when it makes sense to proceed with an investment. Our Client, a venture capitalist firm specializing in financial technology (FinTech) companies, was completing due diligence on a pioneering FinTech startup that created one of the first fully digital businesses for professionals to buy business insurance online. Projecting significant revenue growth potential, our Client sensed a strong investment opportunity and was inclined to move quickly, so they asked Trexin to provide an unbiased, 3rd-party assessment of the digital technology itself to fully vett the opportunity, determine the target’s full potential, and provide a clear post-investment agenda.
Adhering to the adage “be quick, but don’t hurry”, Trexin applied a 4-step approach to this project, completed over a 2-week period:
- Review company background and technology information from provided documentation
- Conduct a 2-day onsite assessment of information technology systems and personnel
- Analyze all information and seek clarification with key company personnel, as needed
- Create a detailed findings report
This approach was facilitated by applying Trexin’s Technology Evaluation Framework, which guides assessment across 12 areas of measurement: scalability, flexibility, risk, maintainability, complexity, interoperability, localizability, security, performance, multi-tenancy, infrastructure footprint, and cost. A full code review was not in scope, but sample code reviews, application demonstrations, and technical discussions allowed assessment of system architecture, objects/components, database, interfaces, messaging, application design, and coding practices.
In addition to a concise scoring summary across the 12 assessment areas supported by technical component analysis details, Trexin provided 7 specific recommendations if an investment were to be made. This assessment completed the due diligence process by providing a deeper understanding of digital platform costs, risks, and likely next steps. Our Client decided to proceed with the deal, the sole Series A investor. 5 years later they drove a $30M Series B round, and 10 years after their initial investment the company had grown to the largest online insurance marketplace for small businesses in the US, licensed in all 50 states, managing over $400M in annual premium, with expanded service for retail clients and support for banks, brokerages, and insurance companies through a wholesale offering.