Early-stage diligence

An early-stage software company hands an investor a folder, and the folder mixes documents of very different standing: registers the law requires, contracts a court would read, and slides written last week. This brief sorts that material by the kind of claim each item can support.

Six records come up in turn: shareholdings, ownership of the code, the sale of shares, the tax elections of founders, product security practice and the open source components inside the product. For each it reports what a public source says about the rule behind the record, and then separates that report from analysis of how a reader might test it.

One more section covers the figures a company reports on its own behalf, where public sources say least. The brief closes with questions to put to a company, and with a plain account of what a review of documents cannot establish.

The brief describes how the subject works in general. It is about no company and is not an assessment of any. It is general information for investors. It is not legal, tax or investment advice.