Auto Alpha AdvisoryIn April 2025 the US Securities and Exchange Commission sued the founder of a shopping app called Nate. He raised over $42 million, and the SEC alleges he told investors in the Seed and Series A rounds that the app used AI to complete purchases without human involvement. According to the SEC, the company relied in large part on contract employees entering the orders manually.
An independent read of the company's public claims would have caught part of that. It would have filed the AI claim under not verified, because a register or a filing can rarely confirm how a product works on the inside. Then it would have turned the claim into a question for the company: how do you measure the automation rate, and can you show me? It could not have seen the people entering the orders. If you're about to put money into a company, you need both halves of that answer.
I'm a CA(SA), and my definition of diligence is short. Diligence presents the facts as they are. It doesn't say buy or don't buy. It says: these are the things you should worry about if you're thinking of investing.
What you get: a fact-base and the questions it raises
The investor door of The Full Read is for a fund, syndicate or angel with a named company in mind. You get a verified fact-base and the questions it raises, and I walk you through both on a call. The written part is a Prospect Integrity Memo with three headings: what was verified, what wasn't, and what was contradicted.
People underrate the middle heading. Not verified doesn't mean false. It means the only source for the claim is the company itself, and you should weigh it that way.
Every number, name and badge starts out overstated
I treat every number, name and badge on a company's website and in its documents as overstated until a primary source confirms it. That covers revenue figures, customer logos, licences and certifications. Primary means the record the claim depends on: the company register, the register of whichever regulator licenses the activity, the filings, and the company's own terms. In South Africa the first stop is usually CIPC's site, which has a company search. If the pitch deck says the business has traded for a decade, the registration date agrees or it doesn't. If the footer says the company is authorised, the regulator's register lists it or it doesn't.
Filings need more care than people give them. A filing confirms what the filing itself establishes, such as who the directors are and what the company reported. Where a filing simply repeats the company's description of itself, that's still the company talking, with a stamp on it. In March 2024 the SEC settled charges against two investment advisers for $400,000 in civil penalties over misleading statements about their use of AI. The larger penalty, $225,000, went to the adviser that had made its claims in SEC filings, a press release and on its website from 2019 to 2023. The other paid $175,000 and had called itself the "first regulated AI financial advisor", according to the SEC's press release. SEC Chair Gary Gensler put it plainly: "Investment advisers should not mislead the public by saying they are using an AI model when they are not."
Regulators tell investors the same thing. The joint investor alert from the SEC, NASAA and FINRA, dated 25 January 2024, warns that "Companies might make claims about how AI will affect their business operations and drive profitability." It also tells investors to treat a promoter's lack of registration as "a prompt to do additional investigation before you invest any money."
What a company leaves out is part of the read
Checking the claims a company makes is half the work. The other half is checking the registers it didn't mention. A business that sells something regulated but never names a licence has told you something by staying quiet. So has a business whose register entry lists different directors from the team page. The read goes to the records that would apply to a business of that kind, whether or not the company pointed to them.
The company answers, and the answers get checked
When the company replies to the questions the memo raises, I verify its replies in a second round, held to the same primary-source standard as everything else. An answer nobody checks is one more claim. That round is part of the quote, not an extra line on the invoice.
The findings nobody can fix are the ones you're paying for
Plenty of findings are fixable. A wrong figure on a page, a badge that has lapsed, a claim with no source behind it: work on the website or the documents sorts those out, and for a company buying remediation that's the point.
Then there's the class that no work on the platform can fix, because the finding is a fact about the business, its market or a third party. Think of a licence the company doesn't hold, a partnership the partner's own directory doesn't list, or a platform whose terms prohibit the very thing the business model depends on. To a company buying remediation these are a footnote: noted, nothing to build. To an investor they're the product, because they'll still be true whatever the website says next month.
Where the read sits in a full due diligence
Before you buy into a business you need more than a read of its public claims. A full due diligence also covers the financial statements and the quality of the earnings in them, tax standing and standing on the company register, customer concentration, the key contracts and the key people.
The read covers one part of that: what the company says in public, checked against registers, filings and its own documents. It doesn't cover the books. Whether revenue recurs, what the real margin is, whether one customer is half the turnover: those answers need the company's records and a financial due diligence by someone with access to them. I'd be the first to tell you the two aren't substitutes. Nate shows where the boundary falls. The public claim could be flagged and questioned from outside, but what was happening to the orders was an inside question.
What the read won't do
The read works from public information and what the company sends. It isn't a forensic audit and it doesn't see inside the books. Nor is it an audit, review or other assurance engagement under international or South African standards, and it gives no assurance. It sets out what I found, with the evidence beside each finding so you can check it yourself.
It assesses the company, never the investment. It isn't financial advice, and nothing in it recommends that you invest, or that you don't.
There's a statutory reason for that line. The FAIS Act, Act 37 of 2002, as published, defines advice in section 1(1) as "any recommendation, guidance or proposal of a financial nature furnished, by any means or medium, to any client or group of clients", including in respect of "the purchase of any financial product" or "the investment in any financial product". The read stays on the facts side of those words and leaves the decision with you and whoever advises you.
Starting an investor read
The investor door is quoted per company, in rand, after a 15-minute call. The memo arrives on a date fixed in the letter, normally three business days from the brief. If you have a named company and a decision coming, book the call and bring whatever the company has sent you.