Reading a company like a prospectus
Q2 2026Before I sold or built anything, I spent six years in finance: hedge-fund administration, financial advising, and taking companies public on the Deutsche Börse. The part of that work that changed how I think was drafting prospectuses.
A prospectus is a strange document. It exists to sell shares, and it is legally required to tell the truth. Those two pressures, pulling against each other under liability, produce a discipline I have never seen matched anywhere else in business writing. You must explain, in plain declarative sentences, how the company actually makes money. Not the vision. The mechanism. Who pays, for what, how often, at what margin, through which channel, with what concentration. And then, in the section everyone reads last and should read first, you must disclose every material way it could break.
Writing risk factors for institutional investors is a forced honesty exercise. Vague worry is not allowed; each risk must be specific enough to be assessed. "Competition may increase" is filler. "Three customers represent 61% of revenue and each contract renews within the same fiscal quarter" is a risk factor. To write sentences like that you have to read the company inside and out: the contracts, the cohort data, the dependencies, the founder's calendar. The document is only as good as the examination behind it.
When I moved into enterprise technology, I noticed something uncomfortable. Discovery, as commonly practiced, would not survive prospectus standards. Ask a revenue leader how the company makes money and you get the pitch. Ask where it could break and you get either optimism or a competitor's name. The specific, mechanical, liability-grade description of the business rarely exists anywhere, including in the heads of the people running it. Decisions get made against the pitch instead of the mechanism, and the gap between the two is where quarters go to die.
So I brought the discipline with me, and it became the spine of how I diagnose. Before prescribing anything, I write the client's prospectus in miniature. How the money actually moves: which motions produce revenue, at what conversion, at what cost, on what timeline. And then the risk factors, drafted as if investors would read them: the pipeline concentrated in one segment nobody chose deliberately, the closing motion that exists only in the founder's instincts, the onboarding process that depends on four people's memory, the data layer where the numbers disagree depending on who exports them.
The exercise sounds heavy. It takes weeks, not hours, which is exactly why it earns its keep. Most bad prescriptions in this industry, the wrong software, the premature hire, the reorg that reorganizes the symptom, are downstream of a business description that was never written to a standard where anyone could be sued over it.
Here is a version any operator can run without me. Draft two pages. Page one: the mechanism, how a dollar of revenue is actually produced, stated so specifically that a stranger could audit it. Page two: ten risk factors, each concrete enough that you could design a test for it, ranked by how much of the year they could take with them. Then hand it to the two colleagues most likely to disagree and keep only the sentences that survive.
What survives is the truth you can build on. Everything else was the pitch. Investors learned long ago not to fund the pitch. Operators should stop running the company on it.