I would say ‘based on’ because you will find similarities, but the mistakes in this list are MINE, not his!

So what would I look at while investing – I am not including management integrity – I would not even consider a company if I am not sure about the integrity. Recently saw a company which had its Income tax, Company Law matters, and Service tax in a mess. Did not go beyond that! So as a private investor (or investment investigator) where you start does not matter..but yes I would look for these things.

1. Dealing with the revenue authorities: if the records are clean, they have nice IT orders, their company law compliance  is clear, the returns filed on time, …it gives a sense of comfort. Many businessmen ignore this thinking that all this can be set right at a later date. It is not that simple. How much of tax to pay is mathematical, not emotional. Tax payment dates are sarcosanct and not negotiable. For an auditor a very good place to start instead of cash flows 🙂
2. Promoter / Merchant banker should be able to explain the business in one breath: a very complicated business catering to a very big, complex market, multiple locations, multiple currencies, etc. is just not my cup of tea. I prefer a straight forward business, well implemented and proof of cash surplus.
3. Proven cash flow from a few clients: Clear cash flow for a product / service. An annuity kind of a business is easier to value rather than an I.P. based product which has been sold to a few clients. Unless of course it is a product that has mass appeal.
4. What is the Risk that I am taking: How will I find an exit if I want to exit in say 8 years if the promoter is not able to get the listing done? Will a bigger VC buy me out? will the business cash flow justify my equity buyback? will the buy back kill the company? Can I get a bigger round of VC funding by myself even if the promoter is unable to? How much of a haircut am I willing to take?
5. What return am I expecting in this business?
6. What is the quality of people that this business is able to attract? and how long do they stay?
7. The ‘favorite’ employees are favorites for what reasons? Probe them.
8. What view do the vendors have? One finance company was rejected by a VC because one software vendor accidentally mentioned the client as a guy who had stolen the vendor’s idea (and was confirmed by one ex CTO).
9. Strong barriers to entry?
10. Intuitively, a product that can be sold to a lot of people and scaled up without too much risk?
11. Is the technology subject to obsolesence?
12. Exactly why the money is being raised, and how many new investors are coming in?
13. Based on the valuation being offered, what is the value-price gap?
14. Am I paying too much of a premium for growth?
15. If the current top team were to be replaced how disruptive would it be?
16. If previous rounds of funding have happened, have those people got good exits?
17. Age/attitude / health of the promoter

will add more..!!