AI Diligence // Software / SaaS # They sell AI. You're buying the gross margin. In software the AI question is a margin question and a moat question . An “AI-native” product built on someone else's model has someone else's cost curve and someone else's roadmap — and the multiple you're paying assumes neither. Book a scoping call → What typically breaks ↓ The confirmatory assessment — the actual product, not a mockup. 01 // The four surfaces ## Four surfaces, read for this sector. The method doesn't change. What changes is where the risk concentrates — and in software / saas, it concentrates hard. Operational — why it matters Internal AI is rarely the risk here — but the inference bill is , and it lands in COGS. Product — why it matters AI-attributed ARR is the whole thesis. Does the usage data support the revenue claim , cohort by cohort? Market — why it matters The most dangerous sentence in software: “the model provider could ship this next quarter.” Financial — why it matters A SaaS multiple assumes SaaS margins. Inference cost per seat can quietly turn 80% into 60%. 02 // The failure modes ## What typically breaks in software / saas. These are the findings we look for first — ranked by how often they turn up, and what they hit when they do. Frequency reflects what we look for and how often it surfaces in this sector — not a published benchmark. Sector baselines are built from completed engagements and released only when the sample supports them. 03 // One finding, priced ## A finding is only real when it has a number. The finding Value at risk What it becomes AI feature set is a prompt layer on a third-party model, sold as proprietary IP $6.2M Price reduction · revised operating model Why it matters Growth thesis and multiple both assume a moat that isn't there Illustrative finding · representative of this sector, not a specific client engagement. 04 // How you buy it ## Screen fast. Then go deep. Pre-LOI ### Flash Screen A go/no-go read before the diligence budget commits. ≈ 10 SME hours included - Composite score and red-flag triggers - Sector failure modes checked first - Screen memo: proceed, price, or pass Confirmatory ### Full Assessment The IC-defensible read, sized to your window. ≈ 70 SME hours included - All eight weighted domains, evidence-linked - Management and technical interviews - Findings → terms working session - IC readout and 100-day plan input Sector Healthcare services → Sector Software / SaaS → Sector Insurance & financial services → Sector Industrials & distribution → Sector Business & professional services → Sector AI infrastructure & specialty industrials → Sector Payments & fintech → ## Don't sign for AI you haven't seen. Bring us the target. We'll score the AI behind it — with the software / saas failure modes checked first — and hand your deal team the price, the terms, or the walk. Book a scoping call →