What the memo answersFive questions an investment committee asks about an AI company
Each gets a red, amber or green rating, the evidence behind it, a remediation cost range, and the follow-up questions to put to management.
01Is the AI proprietary, or a thin layer over someone else's model?
How much of the product is calls to third-party model APIs and prompt templates, and how much is the company's own models, data pipelines and evaluation. A new release from the model vendor can erode a thin layer quickly.
02What does it cost to run as usage grows?
Where inference and GPU spend come from, and whether cost grows faster than usage: uncapped token limits, retries with no ceiling, no caching, reserved GPUs with no idle shutdown. Estimates come from the target's own configuration, and from billing data when the data room has it.
03Can the team maintain what it shipped?
How concentrated authorship is, which files change often and are also complex, and where code that calls AI models has no tests. The question is not whether an AI assistant wrote the code. It is whether anyone still on the team can explain and fix it.
04Are the licences clean?
Copyleft dependencies and how the product ships them, since GPL and AGPL obligations turn on distribution and network use. Model weights with non-commercial or use-restricted licences, including the Llama licence terms.
05Is customer data safe around the AI?
Personal data sent to model providers, prompt injection paths, credentials committed in the code, reliance on a single model provider, and dependencies with no pinned version.
+What to ask next
Every finding ends with the questions and documents that would confirm or clear it, so the full diligence team and counsel know where to dig.
How each area is measured