Pre-diligence and due diligence for a pre-seed startup
Pre-diligence is the structured reading of a startup dossier, done before the first call with the founder. It starts from the documents received and establishes what the dossier claims, where each piece of information comes from, what is missing and what contradicts itself, then draws out the questions to ask. It prepares due diligence; it does not replace it.
By Sirven Flaynn Ouamba, founder and president of Flaynn
Published on · Version 1.0
What is pre-diligence?
It comes at a specific point: a deal arrives through your network, and you need to know where to dig before spending a call on it. Its subject is the dossier as the company compiled it: the deck, the answers to the submission form where there is one, the attachments. Nothing in it is guessed: what is missing is flagged.
Its output is a triage according to the Flaynn grid: three provenance labels, placed on the blocks that carry one, and two reading signals. The examples are fictional.
| Marker | What it says | Fictional example |
|---|---|---|
| Verified | Consistent with a register source | 2025 revenue of €84,000 filed with the register |
| Declared | Entered in the submission form or written in the uploaded document, page cited, taken as is, without cross-checking | MRR of €12,000 read on page 7 of the deck |
| Inferred | Produced by the analysis engine: a reading to be confirmed, never a fact | Runway estimated at 11 months |
| Missing | Data expected and not provided | Number of paying customers not provided |
| Inconsistent | Two elements of the dossier contradict each other | Funding round of €600,000 in the form, €800,000 in the deck |
A status never moves up: information that is declared or inferred does not become verified. The last output of pre-diligence is the questions: each inconsistency becomes a question for the call, each missing data point a request to make before it.
Pre-diligence and due diligence: how do they differ?
Due diligence, which the Office québécois de la langue française calls vérification préalable, refers to « procedures of inquiry and examination that take place before a major financial transaction is concluded, so as to have proof of reasonable diligence » (our translation). Pre-diligence comes before it: it concludes nothing, it puts the reading in order.
| Pre-diligence | Due diligence | |
|---|---|---|
| Timing | Before the first call | Before the transaction is concluded |
| Subject | The dossier received, as the company compiled it | The transaction, across « many aspects, notably accounting, legal and tax » (our translation) |
| Depth | The documents received, compared with each other and, for a few data points, with the official register | Procedures of inquiry and examination |
| Who carries it out | The investor who receives the dossier, alone or with a reading tool | The investor, their group or their advisers |
| Documents | Those already received; what is missing becomes a request | Those that establish the claims: filed accounts, shareholders' agreement, cap table, contracts |
| Deliverable | Provenance of the information, inconsistencies, missing data, call questions | The conclusions of the checks carried out |
| Place in the decision | A reading priority, never investment advice | It comes before the conclusion; the decision remains the investor's |
What can pre-diligence establish at this stage?
Three things, under conditions that the Flaynn method publishes. The pre-seed stage changes what can be expected of it.
Consistency with a register
A data point is verified only if it is consistent with a register source, for a company identified by the company number entered on the form (SIREN in France) and whose name in the register contains the declared name. The legal identity (legal form, share capital, incorporation date, insolvency proceedings) and the revenue filed in the register of its country (France, Belgium or Luxembourg), with its year, can then be verified. A company found by its name alone, or by a SIREN picked up from the text of the dossier, remains to be confirmed.
Three figures in the document are also set against the register and the BODACC, under a fixed rule: revenue (same twelve-month fiscal year, consistent within 5%), headcount (against the INSEE employee headcount band, with its year) and the declared round, for which the line says whether capital notices have been published, never that a round is consistent. A line that is consistent does not make the figure in the document verified: it stays declared. Revenue is checked against the register of the company's country, France, Belgium or Luxembourg, when that register publishes accounts. Headcount and capital notices are read only in France: for a company registered in another country, no conclusion is drawn on headcount or the round.
Consistency between documents
Each difference between the document and the form entry is shown with its page, and the analysis engine flags others, three at most per deal. The difference is named without saying which version is right: it is for the call to settle. The absence of a flagged inconsistency does not prove that the dossier is consistent.
Missing from the dossier
A data point that is expected and not provided is listed as missing. Nothing is deduced from it: it is neither proof that the information does not exist, nor a flaw in the project. The pre-seed pre-diligence checklist gives, across six blocks, the document that lets you verify for yourself each common claim in a deck.
What changes at pre-seed
At pre-seed, having no revenue is not a negative signal in itself. The evidence suited to the stage are documented interviews, signed letters of intent, active test users, and pilots and signed partnerships. In the weighting published by Flaynn, Team weighs 30 points out of 100 and Traction 10 at pre-seed, against 20 and 25 at seed.
The register, for its part, contains only what has been filed with it: a recent company may have filed no accounts there. For such a company, the Verified status can only apply to its legal identity. And for a deal you import yourself, statuses are mostly inferred: the import contains no entered figures, and the company number (SIREN in France) is optional there.
What does it not establish?
Verified means one thing only: the data is consistent with a register source. It does not mean:
- that the accounts have been audited;
- that a bank statement or a payment account has been consulted;
- that a contract, articles of association or a shareholders' agreement have been legally checked;
- that a person has reviewed the data point;
- that the data is up to date: the register reflects the latest filing, whose year is stated;
- that the data is favourable: a verified figure can be bad.
An attachment does not change the status of a figure: it feeds the reading, can bring out an inconsistency, and above all lets you verify for yourself. A market element is never verified, even when sourced: it stays inferred. An inference can be wrong. Flaynn's reading therefore does not attest that a dossier is accurate: it shows what could be reconciled with a source, and what could not.
Who does the due diligence next?
You, your group or your advisers. What is still declared at the end of pre-diligence remains to be verified: it structures the reading; the final checks and the decision are yours.
For a major transaction, the Office québécois de la langue française cites « accounting professionals, legal advisers and other specialists » (our translation). Flaynn's method stops short of these areas, and the checklist says so line by line. A shareholders' agreement receives no status there: it is a document to request, and Flaynn gives no legal reading. Eligibility for JEI, CIR or the IR-PME reduction remains a presumptive reading, never tax advice, to be confirmed by a chartered accountant.
What pre-diligence leaves you with is a running order: inconsistencies first, then the figures that your reading rests on (revenue, growth, amount raised). If they are declared or inferred, the document that would establish them is the first thing to ask for.
How Flaynn goes about it
Flaynn Intelligence, Flaynn's analysis engine, applies a public, signed method: external research frozen for the dossier, reconciliation with the register under the conditions described above, five pillars scored out of 20 according to a weighting published by stage, then a separate counter-analysis that receives neither the score nor the pillar scores and can only lower the score or leave it unchanged. The score out of 100 is a reading signal and an analysis priority, never investment advice.
For more detail:
- the pre-diligence methodology: steps, pillars, weighting;
- the Flaynn provenance grid: the five markers;
- the pre-seed pre-diligence checklist: documents and questions, block by block.
This page describes a method for reading a dossier. It constitutes neither investment advice nor legal, accounting, tax or financial advice. The decision remains that of the reader and their advisers.
Read your deals with the provenance grid.
Flaynn Intelligence applies it to every deal you import: provenance, inconsistencies, missing data and call questions, 5 analyses per month.
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