Mergers & Acquisition Due Diligence

Social Media Monitoring Platform

Industry: Big Data & Social Analytics
Service: Accelerated M&A Due Diligence|Code & Architecture Review|Customer Validation|Reference & Financial Audit

Overview

An angel investor asked us to evaluate the risk of a potential investment in a social media monitoring and big-data collection application. A five-person start-up in Tel Aviv had built an innovative data-harvesting platform; the investor needed an impartial assessment within three days before committing to a seed-stage round.

At the time, the technology itself was revolutionary — it collected and organized huge amounts of data for marketers to evaluate consumer mood, sentiment, and affinity using the top social media platforms as an input source. On paper, the platform provided a rich prism into consumers’ online lives. If it performed as advertised, the investor believed in its potential — but he needed assurance the start-up was a safe bet.

Evaluation Criteria

Management Team Credibility

Establish the credibility of the management team and surface any red flags before capital was committed.

Validated Market Need

Understand the real market need for the product through direct customer interviews — not just founder claims.

Code & Engineering Quality

Evaluate the quality of the code base, the skill of the development team, and the processes they followed.

How We Solved It

With an informal due-diligence window of only three days, the goal was to collect as much insight as possible as quickly as possible. Sphere provided an accelerated M&A Due Diligence engagement focused on four pillars:

1. References
In a seed round, the development team is the only true investable asset. References from previous employers were used to understand career longevity, stability, and responsibility — and to uncover potential red flags before the term sheet was signed.
2. Financial
In a seed-stage round, books unencumbered by personal-account intermingling allow investors to make a judgment on financial discipline. We audited the books for clarity, separation, and consistency with the founder’s narrative.
3. Customer Calls
To understand the value of the product, we spoke with multiple beta users. When only positive references were received, we sought references from other customers — surfacing the unfiltered truth about adoption, traction, and product fit.
4. Code Review
The software architecture was scrutinized and a sample of code was examined. The processes employed by the developers were documented, with particular attention to scalability, security, and maintainability of the data-collection pipeline.

Delivery

With this information collected, a fast report detailing findings and concerns was delivered to the investor — on time, in three days.

The Results

The findings and recommendations contained in the report convinced the founder that his valuation expectations were too high. With an understanding reached, the angel investor funded the seed-stage round on terms that reflected the validated reality of the business.

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Lee Ebreo

VP of Engineering at Credit Ninja

These things would not have been achievable if we did not build our own in-house system and if we did not partner with Sphere to help us achieve our goals.

Selah Ben-Haim

VP of Engineering at Prominence Advisors

Our experience with Sphere and their team has been and continues to be fantastic. We keep throwing new projects at them, and they keep knocking them out of the park (including the rescue of a project that was previously bungled by another vendor).

Ben Crawford

Senior Product Manager at Enova Financial

I would expect to be delighted. It's been a really positive experience, working with Sphere, and I would expect you to have the same.

Mark Friedgan

CEO at CreditNinja

Sphere consistently prioritizes the needs of their clients, demonstrating both agility and teamwork. As an offshore team, they have been an integral part of our organization and we plan to continue growing with them.

René Pfitzner

Co-Founder at Experify

Sphere provided excellent full-stack development manpower to augment our team and help push our product forward. They are easy to work with, tech-savvy and proactive.

Bruce Burdick

Chief Information Officer at Integra Credit

We've been working with Sphere and its excellent consultants since our founding. I've found that they are true partners in the success of our business.

Jemal Swoboda

CEO at Dabble

The resources and developers that Sphere Software provides are skilled and have the required technical expertise, but more importantly, they have helped us build a culture of excellence within our team.

Arthur Tretyak

Founder and CEO at IntegraCredit

With Sphere, we were able to migrate in half the time it would take to train an additional FTE… and for a fraction of the cost. Our experience with Sphere has been exceptional.

Lee Ebreo

VP of Engineering at Credit Ninja

These things would not have been achievable if we did not build our own in-house system and if we did not partner with Sphere to help us achieve our goals.

Selah Ben-Haim

VP of Engineering at Prominence Advisors