KEY TAKEAWAYS
What to take away
- Map decision questions to required evidence.
- Check metric definitions, periods and denominators.
- Separate facts, judgments and unresolved issues.
Agree on the question before collecting files
Due diligence is not complete merely because many files have been collected. The SEC’s small-business glossary describes reviewing legal and financial disclosures to evaluate an opportunity. We use this as a general terminology reference, not as a statement of Japanese contractual or investigation obligations.
Our recommendation is one register of decision questions, required evidence, reviewers and unresolved issues. “Is this growth repeatable?” and “Does the company have the right to use its technology?” need different documents and expertise. Separating questions first helps reduce repeated requests to founders.
Check denominators and measurement periods
Retention can refer to customers or revenue, producing different meanings. Monthly registrations are also different from users who performed a defined action. Our checks cover the definition, population, period, exclusions and collection method. Establish comparability before looking for an impressive number.
Separate one-time setup revenue, recurring fees, pilot payments and refunds. Explain when one large customer materially changes totals. These are not universal investment thresholds. Choose measures appropriate to the business and update comparisons when definitions or errors change.
Connect commercial, IP and team questions
Growth can coexist with unanswered questions about key-customer renewals, rights from external developers or critical team roles. Our recommendation is to connect the assumptions behind the metrics to contracts and operations. Separate verified matters from management explanations that have not yet been checked against evidence.
Investment review does not justify unlimited sharing of customer or personal information. Define viewers, purpose, retention and masking needs, adjusting access to the stage. Legal and IP conclusions require specialists reviewing the actual contracts and facts; file volume alone does not establish that no issue exists.
Record facts, judgments and conditions separately
A conclusion limited to “invest” does not explain when reassessment is needed. Our suggested record separates verified facts, interpretation, uncertainty and preconditions for execution. Show favorable and adverse scenarios so readers can see which assumptions the decision depends on.
Founders can turn findings into operating improvements by tracking responses and supporting documents. Investors should not equate completing a review with avoiding loss. This is a general review method, not a recommendation concerning a company, product or investment decision, and it offers no return guarantee.
SOURCES & VERIFICATION
Sources & verification
This editorial analysis references the primary sources below. Check the applicable program, jurisdiction and conditions; consult the relevant organization or professional for individual decisions.
- SEC｜Small Business GlossaryChecked: 8 Nov 2026
