AI due diligence horror story: $4.2M ARR startup was GPT-4o wrapper, deal killed
alex_verem · x · 2026-11-03
A due diligence consultant shares an AI M&A case: a startup with $4.2M ARR growing 40% YoY asked 12x revenue and pitched a "foundational model architecture" across 14 slides. Opening the codebase revealed GPT-4o, a system prompt, a React frontend, and 600 lines of glue code — the buyer walked.
His take: API-built companies can still be valuable (customers, distribution, data, embedded software), but buyers must know which asset they're actually paying for.
Related event: Due Diligence Exposes $4.2M ARR 'AI Startup' as GPT-4o Wrapper(2 posts)→
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