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Checking for Inflated AI Company Valuations: Five Numbers Are Enough

LuguoAug 122026/08/12 157 views

A friend recommended a method for vetting AI company valuations, saying it was adapted from YC Startup School's due diligence process. Since we've been talking about the AI bubble this week, I gave it a try and went through the hottest AI companies recently. The method isn't complicated—just checking five numbers—but it's way more reliable than guessing based on news headlines.

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Shao XuetingAug 13

Customer concentration is indeed critical for this plan. From a supply chain perspective, if major customers account for more than 50% of revenue, inventory turnover and delivery timeliness are easily held hostage,

Zhong ZhiyuanAug 12

I've seen discrepancies between contract amounts and revenue recognition methods. One company had related-party transactions accounting for 30% in their financial report, packaged as strategic partnership revenue. The attack surface is huge. I suggest drilling down into customer concentration to check if the top five customers share the same ultimate controller.

Weiwei's ShopAug 12

Do those five numbers include ARR and burn rate? I struggle enough calculating my own books in Excel, so I'm genuinely curious how this stuff applies to companies valued in the billions.