Mitigating Risks in Dev Agency Due Diligence for Corporate Venture

"Mitigating Risks in Dev Agency Due Diligence for Corporate Ventures"


Have you been there? Finding a match with the potential business partner, spending many hours talking about the corporate venture project and feeling that you REALLY want to work with them, to suddenly discover that all this time was a waste since they didn’t go through your parent company’s due diligence process?

If you have been working on corporate projects before I suppose this might have happened to you,  and that’s why we decided to write this article – so you can avoid wasting your time on talking with an agency that won’t be able to cooperate with you because of the regulations from your parent company.

We know that legal due diligence is usually carried out just before signing the contract, but you can gain some information about the agency earlier in the process. In this article, we’ll cover topics that are worth discussing during the first meetings with the agency. By starting to evaluate these things early in the process, you can save yourself from costly mistakes down the road. So let’s dive in!

Why should you start due diligence early in the process?

When it comes to corporate venture building, due diligence is a crucial step in the process of finding potential business partners. You work on behalf of the established corporation, so you have to follow their due diligence process to ensure regulatory compliance and protect the overall company’s reputation.

However, many companies make the mistake of waiting until signing the contract to start their due diligence, which can lead to costly mistakes and setbacks.

Starting your audit early in the process allows you to gather important information about potential partners and avoid wasting time and resources on partnerships that may not be a good fit from the legal perspective.

What’s more, it gives you more time to address any issues or concerns that may arise during the evaluation process. Thanks to that you can negotiate better terms and conditions with potential partners, as well as ensure that all parties aligne towards achieving common objectives.

Finding the right partner for the development may make or break your project – so due diligence is an essential step to making informed decisions when it comes to corporate venture building. By taking it seriously and investing time and resources into it, you can increase your chances of success while minimising risks and avoiding costly mistakes.

“The corporation’s requirements are various and depend primarily on the company status, location and industry they operate in. There’s no rule ensuring the development agency passes the due diligence in each and every company, but thanks to the flexibility, high-quality services and readiness to answer the customer’s needs, it can greatly improve the chances to do this.”

Tatiana Gordzijewska, Client Partner at Pagepro

General information about the agency you should gain early on

Gaining general information during the early meetings with the development agency can help you quickly evaluate if they can even be candidates for your business partner. Company profile, technical capabilities and information about the previous clients are the main things to pay attention to. Some of them you can find on their website, but about the rest you may have to ask during the meeting.

General information about the development agency to gain early on and make sure they will pass the due diligence

Number of employees

It gives you an idea of how big the agency is. And a number of developers demonstrate the agency’s capacity and ensure that it can meet the project’s specific requirements. This information also shows the agency’s ability to allocate more developers to the project (if necessary).

Annual employee turnover

Gives a basic understanding of employee satisfaction from the company. A high turnover rate can possibly mean that there are underlying issues with the work environment, company culture, or management practices.

Annual Developer turnover indicates the potential rotation on your project. High developer turnover can lead to inconsistencies in the development and could potentially delay your project timeline if new developers need to be onboarded.

Cooperation with subcontractors

It can affect the quality and consistency of the work. While they may provide valuable expertise and resources they may not be engaged in the project the same way the agency is. Your provider should have a clear plan of the potential cooperation’s management.

Typical client characteristics

This information gives you an idea if the agency is the right partner for you. Experience working with the customer in the given industry or in projects similar to yours (in terms of size, purpose or solutions) indicates that the agency understands the specific needs and is ready to overcome the challenges that may appear during the process. In projects like yours, the agency’s experience in cooperation with corporations may be really important, because this type of client often requires a different approach than small businesses or startups. Corporations typically have more complex processes, systems, and requirements that need to be taken into account during the development process.

The biggest client and its annual turnover

It points out how the agency’s revenue is divided between customers.  If one client makes up more than 50% of the agency’s total income, it can be a red flag, because losing this project could have a severe impact on the agency’s revenue and its ability to deliver projects successfully. Additionally, having a high level of dependency on one client may imply that the agency does not have a diversified portfolio of clients and may limit its ability to take on new projects.

Looking for the right dev agency?

What type of insurance should the development agency have to cooperate with the corporate venture building team?

When considering a development agency for your corporate venture building project, it’s important to ensure that they have the appropriate insurance coverage. This not only protects the agency itself in case of any accidents during the project but also provides peace of mind for the corporation, your parent company. The type of insurance that a development agency should have depends on the nature of its work and the specific project at hand. However, some common types of insurance include public and product liability insurance, professional identity insurance, employer liability insurance and cyber and data insurance.

Types of insurances the development agency should have to cooperate with corporate ventures

Liability insurance is a common requirement among the development agency’s clients because it provides an additional layer of protection against potential legal and financial liabilities. It can provide coverage for legal defence costs in the event of a lawsuit or legal claim against the development agency, and having them in place is a standard business practice.

Public liability insurance

Protects the agency in the event of a claim made by a member of the public for damages or injuries caused by the agency’s activities.

Product liability insurance

Provides coverage against claims made by customers or users of their products if they suffer injury or property damage as a result of the product’s design, manufacture, or instructions.

Without public and product liability insurance, a development agency may be at risk of significant financial losses if they are found liable for damages or injuries caused by their activities or products. These losses could include legal fees, compensation payments, and other costs associated with defending a claim. The average public and product liability insurance has a limit of indemnity of £2 million pounds.

Professional liability insurance

Also known as errors and omissions (E&O) insurance, covers any mistakes or negligence of the provider that may result in financial loss for your corporation. This may include claims related to software defects, data breaches, or other technical issues. Usually, the level of coverage is £5 million pounds.

Employer liability

Another insurance type that may be required by your corporation from third-party providers is employer liability. This one protects your company from potential legal and financial penalties associated with workplace injuries and illnesses suffered by the agency’s employees. The minimum amount of cover provided by the policy is £5 million pounds.

Cyber and data insurance

Because of the nature of work that the development agency would provide to your company, your legal team can require them to have cyber and data insurance confirmation, which provides coverage for potential cyber threats and data breaches that could impact your company’s operations or reputation. This coverage can help to mitigate financial and legal liabilities that may arise from such incidents. Additionally, by partnering with a development agency that has cybersecurity insurance, you can reassure your stakeholders that you take cybersecurity seriously and take steps to protect their data. Most smaller tech companies have cyber liability insurance with a level of coverage of £1 million pounds.

It’s worth making sure that the agency’s insurance policies provide adequate coverage for your specific needs and requirements. You can ask about the proof of insurance during one of the meetings to let your legal team investigate it thoroughly even before running the due diligence.

Checking the business continuity – Why is it important for your corporate venture project?

Building a corporate venture is risky in its nature, so mitigating the risk from cooperation with external providers is crucial. Checking a development agency’s business continuity plan is a necessary aspect of the evaluation. It outlines how they will continue to operate in the event of a disruption, such as a natural disaster, cyberattack, or other unexpected events. This plan should address critical areas such as data backup and recovery, emergency communication, employee safety and well-being, and supply chain continuity.

By checking the development agency’s business continuity plan, you can ensure that the agency is well-prepared to handle any disruptions and minimise any potential negative impact on the project. This can help to provide peace of mind and assurance that the project is in good hands, even in the face of unexpected events.

The other things to consider are:

How long the company exist because its often an indicator of its experience and reputation in the industry. What’s more, a company that is on the market for years is more likely to have established relationships with clients and partners and may be more financially stable. It may be less likely to face sudden financial or operational challenges that could impact the success of your project.

Legal statement of company creation (like KRS in Poland) which may seem obvious but is a crucial document that confirms the establishment of a company and provides legal recognition, liability protection, investor confidence, and regulatory compliance.

What should you know about the financial state of a potential development agency? 

It’s crucial to understand the agency’s financial state before signing the contract with them. This information can help you assess their stability and ability to deliver on their promises. One key aspect to look at is the agency’s revenue and profitability over time.

Understanding the agency’s funding sources and any outstanding debts or liabilities they may have is necessary. This can give you insight into their financial health and potential risks associated with working with them and help you determine if they have the resources to complete your project on time and within budget.

Revenues for the last few years provide an indication of the agency’s financial performance over a period of time. It can help identify any trends for growth or decline and assess the agency’s stability. A successful financial track record may be an indicator of a well-managed and financially sound company.

Planned revenue for the next year can give an idea of the agency’s confidence in its ability to secure new clients, complete projects successfully, and meet financial targets. A strong projected revenue can demonstrate the agency’s commitment to growth and financial stability.

And finally, the lack of debts or financial difficulties during the last 12 months shows that the agency is managing its finances well and not struggling to meet its financial obligations. A lack of financial difficulties can also demonstrate the agency’s ability to manage risks effectively.

Overall, gaining an understanding of a potential development agency’s financial state is crucial in making an informed decision about whether or not to work with them. By doing it early, you can avoid any surprises down the line and ensure that your corporate venture has a strong foundation for success.

What else is worth checking during the process of evaluating the development agencies? 


There are some certifications or qualifications that demonstrate the agency’s expertise in their field and assure that they meet industry standards and regulations.

One of the most common certificates are ISO 9001 and ISO 27001. They assure that the development agency has implemented quality and security management systems that meet international standards.

Another common certificate is SOC2 which ensures the agency has implemented strong data protection and information security controls.

Agency’s location 

The location of a development agency can influence its ability to pass due diligence. The legal and regulatory environment can vary by location, which may impact a development agency’s ability to comply with relevant laws and regulations. For example, if the agency is located in a country with weak data protection laws, this may raise concerns about its ability to protect sensitive data.

The business culture may also vary by location. Your parent company may have concerns about the internal agency’s practices if it’s located in a region known, i.e. for corruption.

Another factor influenced by the location is the infrastructure and connectivity that may have a further impact on an agency’s ability to deliver services. Corporate ventures may be concerned about the agency’s ability to provide reliable and secure technology services if they are located in a region with poor infrastructure or connectivity.

Anti-slavery policies 

Most of the big companies are very careful to not contribute or profit from any form of modern-day slavery or human trafficking. That’s why anti-slavery policies are often required from the third-party vendors they are about to work with on each corporate venture project. An effective anti-slavery policy help ensures that the development agency is devoted to ethical and responsible business practices. It’s an important consideration for corporate ventures looking to build partnerships with agencies that share their values and goals.


Conducting due diligence on a development agency is crucial to avoid risks and ensure that they meet the standards and requirements of a corporate venture project. Fortunately, there are several key points that can be easily checked during the early stages of the partnership. These include assessing the agency’s experience, and reputation, and reviewing its insurance policies and data protection certificates. It is worth requesting this information while the agency prepares a proposal, as it can save time and resources later on. Spotting red flags early can save hundreds of hours and help to ensure the success of the corporate venture project. By being thorough and vigilant during the due diligence process, corporate ventures can minimise risks and build successful partnerships with development agencies.

Looking for the right dev agency?

If you want to learn more about the cooperation with the development agency in your corporate venture building projects:

10 things to look for in the corporate venture development offer

Why use Jamstack for corporate venture building?

Chris Lojniewski

CEO at Pagepro - React & React Native software house specialising in building tailor-made web applications for clients around the world. Chris is currently spearheading a mission close to his heart: making development frictionless. His philosophy transcends the conventional, recognising that while modern tech, especially React & React Native, is a game-changer, the real revolution lies in combining cutting-edge technology with effective processes, creative exploration, and strategic foresight.

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