Why investors should care about product development performance

Investing in early-stage software startups can be challenging due to the difficulty in predicting future performance, especially in markets with established competitors. However, product development performance serves as a valuable leading indicator of business success, as demonstrated by the rise of Outreach in the Sales Engagement Platform market. Investors can benefit from incorporating software development metrics into their technical due diligence, focusing on metrics such as the DORA metrics, which include change lead time, deployment frequency, change failure rate, and mean time to recovery. These metrics, supported by research from the DevOps Research Association and detailed in the book "Accelerate," have shown a strong correlation with business performance. The SPACE framework further enhances understanding by incorporating dimensions like satisfaction, well-being, communication, and collaboration, offering a holistic view of engineering productivity. Evaluating these metrics can help investors gauge a startup's potential to execute effectively, providing a more informed basis for investment decisions.