CTO Build vs Buy Decisions at Series B Companies: Frameworks for Clarity and Leverage

Core Drivers of Build vs Buy Decisions at Series B Stage

Series B CTOs look at build vs buy through three main lenses:

• Does it move the business needle?
• Does it set us apart from the crowd?
• How soon do we need it live?

Strategic Alignment With Business Objectives

Decision Criteria by Business Objective Type

• Map candidate features to core business goals for the next 12-18 months
• Build if the capability directly drives revenue, growth, or valuation
• Buy for supporting ops functions that don’t create a moat

Resource Allocation Framework

• Every build means something else waits - CTOs must weigh which delay hurts more

Competitive Differentiation Versus Commodity Functions

Core vs Commodity Classification

• If competitors can buy the same thing and get parity, it’s a commodity - just buy
• If your implementation is what makes customers care, that’s core - build it

Time-to-Market and Opportunity Cost Assessment

Speed-to-Deploy Comparison

• Buy when you need to move fast and the market won’t wait
• Building slow means you might miss the window

Opportunity Cost Calculation

• What can’t your team deliver while building this?
• Delaying features can cost 15-25% user growth - often more than the dollars saved by building

• Scalability needs tip the scale - if you need to support lots of users fast, building may simply take too long

Technical and Financial Evaluation Frameworks

CTOs at Series B have to nail both short-term and ongoing costs, plus tech fit and risk. A structured framework cuts failures by 30-40% and keeps solutions tied to business goals.

Total Cost of Ownership and Maintenance Considerations

TCO Analysis Components for Series B Stage

Hidden Maintenance Costs

• Bug fixes, tech debt

• Upgrades, dependency wrangling

• Docs and handoffs

• Incident slowdowns

• Series B teams rarely have bandwidth for systems that need 50+ experts

• Custom builds eat ongoing engineering time; off-the-shelf shifts that to vendor, but you’ll pay for support and subs

Integration Complexity and Technology Stack Compatibility

Technology Stack Evaluation Matrix

Integration Risk Factors

• API/webhook quality
• Data migration needs
• Platform compatibility
• Customization limits

Pre-Purchase Technical Validation

• Get API docs, test endpoints

• Spin up a proof-of-concept in staging

• Check data portability/export

• Load test performance

• Confirm your team can actually troubleshoot

• Off-the-shelf tools often need custom bridges - hybrids raise both cost and complexity

Vendor Lock-in, Support, and Security Risks

Risk Management Decision Table

Vendor Lock-in Mitigation Strategies

• Negotiate data migration help upfront
• Demand open APIs
• Avoid proprietary formats
• Set exit criteria before signing

Security Evaluation Checklist

• Frequency of security updates

• Vulnerability disclosure/patch timing

• 3rd-party audits/certs (SOC 2, ISO 27001)

• Data encryption (at rest/in transit)

• Access/auth controls

• Custom builds mean your team owns all security; this can be a plus with expertise, a risk without

• Series B teams rarely have enough people for both product and infra security

• Structured frameworks save 25% by sizing team capacity before building

Frequently Asked Questions

What are the primary factors to consider when deciding between building in-house software or purchasing off-the-shelf solutions for a Series B company?

Primary Decision Factors

Resource Availability Checklist

• Enough engineers to spare?
• Team knows needed tech stack?
• PMs can spec and manage requirements?
• DevOps can support deployment/maintenance?

Strategic Alignment Criteria

• Feature shows up in competitive decks?

• Directly impacts customer acquisition/retention?

• Enables proprietary data/analytics?

• Protects IP or core business process?

• Structured frameworks at Series B cut failures by 30-40%. At this stage, CTOs are always balancing getting things done now with building a moat for the long haul.

How does a Series B company evaluate the total cost of ownership between build versus buy software solutions?

3-Year TCO Comparison Model:

Hidden Cost Categories:

• Opportunity cost: Engineering team allocation
• Technical debt: Future refactoring required
• Vendor price escalation: 15-25% annually at renewal
• Security audit & compliance certification
• Data migration: Switching solutions later

Break-Even Analysis Timeline:

• Rule → Calculate total cost of ownership over 3-5 years, not just upfront costs.
  Example: "Add up all costs for both options across 3-5 years before deciding."

Budget Risk Factors:

• 15-20% contingency for custom development changes
• Vendor lock-in exit costs: $100K–$500K
• Integration complexity: 40-60% over initial estimates
• Maintenance overhead: 0.5–1.5 FTE required

What strategic implications should CTOs at Series B companies consider when making build vs. buy decisions?

Strategic Impact Matrix:

Organizational Capacity Considerations:

• Engineering allocation: Core vs. infrastructure
• Leadership bandwidth: System ownership
• Product management: Internal tools
• Maintenance: Assign long-term responsibility

Market Timing Factors:

• Rule → Prioritize faster deployment if time-to-market enables revenue acceleration.
  Example: "Choose buy if speed is critical for hitting growth milestones."

Funding Round Implications:

• Built software: Owned asset, increases valuation
• SaaS spend: Reduces operational margin for investors
• Custom development: Shows technical strength to acquirers
• Purchased solutions: May need replacement after acquisition

Scaling Trajectory Alignment:

• Must support 3-5x employee growth (18-24 months)
• Architecture affects new market entry
• Tech choices impact international expansion
• Integration setup enables or limits M&A activity