VCs are taking a huge risk by ignoring the importance of SEO in startup investments

The world of venture capital has come a long way since the dot com bubble of the late 90’s, I’m sure few people will disagree with that.

Modern VC firms employ a large array of technical due diligence processes against any potential investments to stress-test the tech behind companies that are vying for their money.

It’s hard to imagine another Pixelon.com occurring in today’s developed VC market. (Pixelon.com raised $35m in 1999 before liquidating within a year when “it became evident it was using technologies that were, in fact, fake or misrepresented.”)

Typically, any VC firm considering investing in a new venture will either deploy their own technical due diligence, or review that of another investor in the same round.

Photo credit: Deluxe

But what does a round of tech due diligence usually cover?

It is mostly a review of the current tech stack to understand the layers that make up the service provided and identify any known weaknesses. Additionally, the review will likely require the startup to document technical processes, such as the procedures for backing up data, or internal password policies, or structures of data access rights, etc.

This is all pretty much as one would expect. A routine tech due diligence program is designed to understand if the company has the technical ability to maintain the current business and show the ability to expand in line with projections. It’s about shining a light into the dark corners of the business and giving investors an understanding of any potential risk.

After all, how can any investor reasonably evaluate the Risk-Adjusted Return On Capital (RAROC) of a potential investment and reach an informed valuation without understanding the inherent fabric, strengths and weaknesses of the company?

However, there remain some substantial areas of risk that are currently not covered in any due diligence programs and will, sooner or later, lead to tears before bedtime for founders and VCs alike.

The rise & rise of Google

Photo credit: Robert Scoble

Much like the VC landscape, Google has come a long way since the late 90’s and blossomed into the darling of the internet that we now know. A half-a-trillion dollar behemoth that’s an integral part of your home, office, pocket, and even your TV, there are few areas of modern life that Google doesn’t reach into – and it is working on those, believe me.

Back in 2012, Google announced that it processed over 3.3 billion searches every single day.

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