Sample Report

Subject: Meridian Finance Pty Ltd (“Meridian”), a pre-seed Australian fintech building embedded expense management and payments infrastructure for mid-market construction firms (50–500 employees).

Founders: Two co-founders. CEO has 6 years in construction project management (Hutchinson Builders, then Probuild before its 2022 collapse). CTO is ex-Atlassian, 4 years on Jira’s payments integration layer. No prior founding experience for either.

Thesis: Australian construction firms lose 3.8% of project margin to expense leakage, manual reconciliation, and receipt fraud. Meridian will embed real-time expense capture and approval workflows directly into existing project management tools (primarily Procore and Buildertrend), monetising via interchange on a co-branded Visa card and a per-seat SaaS fee.

Capital sought: $1.2M pre-seed. Projected 18-month runway at current burn assumptions.

Finding 1 — Regulatory pathway mischaracterised (See AV-01, A-01)

The founders’ fund-flow model requires an Australian Financial Services Licence. The exemption they cite does not apply to entities holding client funds. Neither the timeline (9–14 months) nor the cost ($180–$350K) of AFSL application is reflected in the financial model. Confidence: EXT-VERIFIED — ASIC RG 185; ASIC Corporations (Non-cash Payment Facilities) Instrument 2016/211; ASIC v BPS Financial Pty Ltd [2024] FCA 457.

[Identified through systematic cross-referencing of the proposed fund-flow structure against ASIC’s published guidance and recent enforcement precedent.]

Finding 2 — Platform dependency on Procore creates single point of failure (See AV-02)

Procore’s Developer Platform Agreement §4.3 prohibits third-party applications from initiating or facilitating financial transactions through the platform. The founders are aware of this clause but present a known contractual blocker as a manageable risk without disclosing the specific language or their lack of a written waiver. Confidence: EXT-VERIFIED — Procore Developer Platform Agreement §4.3, developers.procore.com/terms.

[API terms review is a standard step in platform dependency analysis.]

Finding 3 — Undisclosed competitive threat from Payapps/Autodesk (See AV-03)

Payapps, acquired by Autodesk in January 2024 for approximately $390M USD, has been building embedded payment functionality inside Autodesk Construction Cloud. The founders describe Payapps only as “a progress claims tool” without referencing the acquisition or pivot into broader payment management. This is either a research failure or a deliberate omission. Confidence: EXT-VERIFIED — Autodesk acquisition announcement, 25 January 2024; Autodesk SEC filings confirming transaction at ~$390M USD.

[Identified through acquisition screening and hiring signal analysis.]

Where the subject is right: The 3.8% margin leakage figure is directionally sound. The Australian Master Builders Association’s 2023 industry report places average construction profit margins at approximately 5%, and a 2018 Australian research study found rework alone reduces yearly construction profits by 28%. In an industry operating on single-digit margins, even small efficiency gains in expense management represent meaningful value. The problem is not the subject’s diagnosis. It is the execution pathway they have chosen.

Analytical limitations: This assessment’s confidence is lowest in two areas: the Procore §4.3 enforcement likelihood (no public precedent for API terms enforcement in this specific context), and the Payapps hiring signal data (LinkedIn job postings are indicative but unverified independently). Both findings rest on strong primary sources but weaker secondary corroboration.

Threat: ASIC enforcement action for operating a non-cash payment facility without an AFSL

Actor: Australian Securities and Investments Commission

Likelihood: HIGH   Impact: SEVERE

Timeline: 6–18 months from commencement of operations

Evidence: Meridian’s pooled trust model disqualifies it from the exemption under ASIC Instrument 2016/211. ASIC’s 2024–25 Corporate Plan lists unlicensed financial services as an enforcement priority. BPS Financial (Qoin) precedent demonstrates ASIC will pursue entities regardless of scale, resulting in $14M penalty (January 2026).

Confidence: EXT-VERIFIED — ASIC RG 185; Instrument 2016/211; ASIC v BPS Financial [2024] FCA 457; ASIC media releases 24-090MR and 25-088MR

Linked to: A-01

Threat: API access suspension or termination

Actor: Procore Technologies

Likelihood: HIGH   Impact: SEVERE

Timeline: Upon Procore compliance review (could occur at any stage post-integration)

Evidence: §4.3 of Procore’s Developer Platform Agreement (updated November 2025) restricts third-party applications from initiating, processing, or facilitating financial transactions. Founders acknowledge awareness but believe enforcement is unlikely.

Confidence: EXT-VERIFIED — Procore Developer Platform Agreement §4.3, developers.procore.com/terms

Linked to: A-02

Threat: Incumbent competitor with deeper resources enters the same problem space

Actor: Autodesk (via Payapps acquisition)

Likelihood: HIGH   Impact: HIGH

Timeline: Already in progress; Autodesk Construction Cloud integration ongoing since February 2024

Evidence: Autodesk acquired Payapps January 2024 for ~$390M USD. Public communications reference “construction payment and compliance management” as a core ANZ integration priority. Founders’ competitive analysis describes Payapps only as “a progress claims tool.”

Confidence: EXT-VERIFIED — Autodesk acquisition announcement, 25 January 2024; SEC filings. INFERRED (hiring signal) — LinkedIn job postings indicative only.

Linked to: A-03

[Methodology note: Attack vectors are identified through adversarial role-play — asking “if I were competing against, regulating, or investing against this subject, what would I exploit?” Verification tables provide an auditable evidence chain for the highest-risk findings.]

[AV-04 through AV-06 continue in the complete assessment, covering customer acquisition costs, co-founder dynamics, and interchange rate sensitivity.]

Central question: Can Meridian legally operate its proposed fund-flow model without an AFSL?

E1: Founders reference “our lawyer said” exemption applies (DOC-STATED)

E2: Adviser is a sole practitioner without fintech specialisation (INFERRED)

E3: ASIC Instrument 2016/211 conditions on fund-holding are unambiguous (EXT-VERIFIED)

E4: ASIC 2024–25 Corporate Plan lists unlicensed financial services as enforcement priority (EXT-VERIFIED)

E5: BPS Financial enforcement pursued from early-stage through to $14M penalty (EXT-VERIFIED)

H1: Founders received competent specialist advice that exemption applies

H2: Founders are aware exemption does not apply but believe enforcement risk is low

H3: Founders have not read the actual exemption instrument and are relying on secondhand interpretation

Key: ++ strongly supports   + weakly supports   – weakly contradicts   –– strongly contradicts   N neutral

H3 is best supported (fewest contradictions). H1 is most strongly contradicted. The single most diagnostic evidence item is E2 (adviser specialisation), which sharply differentiates H1 from H3.

See DT-01 in Section 05.

[Methodology note: ACH forces systematic evaluation of all hypotheses against all evidence simultaneously, reducing confirmation bias. The matrix should be read by columns — the hypothesis with the fewest “––” and “–” marks across all evidence is best supported.]

[Full ACH for the central strategic question — “Can Meridian achieve $45K MRR within 14 months?” — appears in the complete assessment with 8 evidence items across 4 hypotheses.]

The following is written from the perspective of January 2027. Meridian has ceased operations. This is a reconstruction of the decision chain, not a prediction. Its purpose is to identify the specific moments where different decisions would have changed the outcome.

Linked to: A-01, AV-01

The founders close their $1.2M round in late February. Within three weeks, their newly retained fintech lawyer (a sole practitioner, not a specialist compliance firm) flags the AFSL issue. The founders face a decision:

Option A: Restructure the product to avoid holding client funds (agency model via a licensed ADI partner). Adds 3–4 months to launch, reduces unit economics by ~40% due to revenue share with the banking partner, but eliminates the licensing risk entirely.

Option B: Apply for an AFSL and delay launch by 9–14 months while burning runway on compliance. The $1.2M does not survive this timeline.

Option C: Proceed without the licence under the belief that enforcement is unlikely for a pre-revenue startup.

In the failure scenario, the founders choose Option C. Their reasoning: “We’ll apply later once we have revenue. ASIC doesn’t go after startups our size.” This reasoning is factually incorrect. ASIC’s 2024–25 Corporate Plan explicitly lists unlicensed financial services as an enforcement priority, and recent actions demonstrate willingness to pursue entities regardless of scale. In the BPS Financial (Qoin) case, ASIC commenced proceedings in 2022 against a company whose product was in active use — and pursued the matter through to a $14 million penalty in 2026, including appealing to the Full Federal Court to expand the scope of findings. The pattern is clear: ASIC invests years in test cases to establish precedent. Source: ASIC 2024–25 Corporate Plan (asic.gov.au); ASIC v BPS Financial Pty Ltd [2024] FCA 457; ASIC media releases 24-090MR and 25-088MR.

See DT-01 and DT-02 in Section 05.

This decision does not kill Meridian immediately. It creates a time bomb that detonates at Decision Node 03.

Linked to: A-02, AV-02

Four months in. The MVP is built. Three pilot customers are onboarded. The product works. Then Procore’s developer relations team sends a compliance notice: Meridian’s application violates §4.3. API access is suspended pending review.

The founders face a second decision:

Option A: Pivot to Buildertrend’s API (less restrictive terms, but 60% smaller ANZ install base). Delays revenue by 2 months, narrows TAM significantly.

Option B: Negotiate directly with Procore for a commercial partnership or exemption. This requires Procore to see strategic value in Meridian’s product — which is undermined by the fact that Procore’s own product roadmap (visible in their Q2 2026 partner webinar) shows native expense features planned for Q1 2027.

Option C: Build a standalone product that doesn’t depend on Procore’s API. This is a different company with a different go-to-market.

In the failure scenario, the founders spend 8 weeks attempting Option B before accepting Option A. They have now burned 7 months of runway and have zero revenue. The 14-month MRR target is no longer mathematically achievable.

Note how DN-01 compounds here. Had the founders chosen the agency model (DN-01, Option A), they would have had a licensed banking partner with existing Procore relationships, providing leverage for the §4.3 negotiation. The unlicensed status makes Procore less likely to grant an exemption, because they would be facilitating unlicensed financial services — exposing Procore itself to regulatory risk.

This cascading interaction between regulatory and partnership risk is the type of second-order failure chain that conventional due diligence does not surface. It was identified using Analysis of Competing Hypotheses (ACH) applied to the regulatory pathway — testing three competing explanations for the founders’ licensing position and evaluating which explanation best fits the observable evidence.

[DN-03 and full cascading failure map continue in the complete assessment.]