∞Direct answer
Direct answer
Use AI to sort files and find gaps. Do not let it clear a deal. Check the company, shares, cash, key deals, AI claims, and access by hand. A mismatch needs a source check. [1] [3]
Set a proof rule before AI reads files
Due diligence means checks before you invest. Make a request list. Name one owner for each check. Say which file can prove each fact.
AI can sort files and flag gaps. It can miss context. Give it one small job. A person must own each result.
NIST asks for proof, test notes, and clear limits when AI is used. Use the same rule here. [3]
- Claim: what the firm says.
- Proof: the source file.
- Check: who read it and when.
- State: clear, open, or needs advice.
Check the company and share record first
Match the legal name and number with formation, tax, bank, and signed deal files. Ask why a name differs. A trade name may be fine. It still needs a note.
Read the cap table, share list, option list, board notes, and investor rights as one set. A cap table says who has shares. Look for a grant, price, or promise that is missing.
A public register is a cross-check, not full proof. UK Companies House shows officers, files, charges, and insolvency data. It cannot replace the firm records. [5]
- Two legal names with no note.
- Share totals that do not add up.
- No signed approval for a key share grant.
- A founder role that differs from a filed record.
Trace money to source files
Ask for monthly accounts, bank files, a cash plan, debt terms, and a ledger sample. Runway means how long cash may last. A plan is not cash in the bank.
Test a small sample. Match a sale to a deal, bill, bank receipt, and ledger line. Match a big cost to its bill and payment. Note the date and money type.
The SEC asks buyers in US private deals to look at accounts, audits, use of funds, and if claims seem fair. [1]
- Sales with no source trail.
- Cash that does not match the bank date.
- A debt, tax bill, or related payment left out.
- A plan that changed with no note.
Test customer and product claims
Pick a few key customers. Check the signed deal, order, bill, payment, end date, and exit right. Ask what the firm calls live sales before you count them.
Read terms that may change value. A trial, free use, exit right, price cut, sole right, or data duty can matter. A logo on a slide is not proof of a live deal.
Treat names and personal data with care. Use only data you need. Ask before you share files outside the deal team.
- Customer claim and source file.
- Start, term, price, and renewal rule.
- Payment seen or not seen.
- Open point and named owner.
Put AI claims through a human test
Ask what the system does, for whom, and where. Then ask for data source, test set, measure, error cases, human check, and limits. Do not take an accuracy claim with no test method.
NIST says accuracy needs real test sets and written methods. It also asks for proof that a system works for its planned use. [3]
Compare the claim with a demo, real use, and the files behind the measure. AI can flag a gap. A person must judge the proof.
- A measure with no test set or date.
- A result with no use setting.
- No way for a person to fix an error.
- A model or data link not named in the room.
Ask for security proof, not a badge
Ask what data the firm holds, who can see it, and how access ends. Ask for an access list, rules, incident log, backup plan, and key supplier list. Match each reply to a file.
NIST groups cyber work into govern, identify, protect, detect, respond, and recover. Its guide is flexible, not a pass list. Use it to ask good questions. [4]
A missing rule may fit an early team. It does not prove a hidden breach. Write the gap, its effect, and a dated next step. Ask good advisers about big legal issues.
- Unknown admin accounts or shared passwords.
- No owner for an incident.
- A key supplier with no risk note.
- Sensitive data with no access rule.
Close with an evidence log, not an AI score
Keep one log for each key point. Add the claim, source, date, reviewer, gap, and next step. Keep facts apart from views. Do not hide a gap in one score.
A Form D can help check a US offer. It is a short notice with little firm data. It is not SEC approval or a full check. [1] [2]
Ask the founder to fix a fact that does not match. A clear reply and source file may close it. A refusal, rush, or new story may need more work. It does not alone prove fraud or pick the deal.
- Clear: source and review match.
- Open: source is missing or clashes.
- Escalate: it may change value or legal risk.
- Decision: the investor makes it, not the tool.
FAQ
Frequently asked questions
Can AI read my whole data room?
AI can sort and search it. It can find gaps. It cannot prove a file is true. Keep a person on each key check. [3]
Is a missing file always a red flag?
No. A new firm may lack a full record. Ask what it has and why. Note the gap. Then judge its effect. Get advice if you need it.
Does Form D prove a US offer is sound?
No. Form D is a short notice with limited firm data. The SEC says it is not approval or registration. Use it as one cross-check. [1] [2]
What should I check by hand first?
Start with the company, shares, cash, key customer terms, and proof for the main product claim. These facts show what needs more work.
REF
Sources
- 1
U.S. Securities and Exchange Commission, Investor.gov
Private Placements under Regulation D – Updated Investor Bulletin ↗ - 2
U.S. Securities and Exchange Commission, Investor.gov
Regulation D Offerings ↗ - 3
National Institute of Standards and Technology
Artificial Intelligence Risk Management Framework (AI RMF 1.0) ↗ - 4
National Institute of Standards and Technology
The NIST Cybersecurity Framework (CSF) 2.0 ↗ - 5