Ferret.ai: Due Diligence for the Modern Age

April 8. 2022. 5 mins read

We’ve been in the business of researching stocks for 20 years now and never cease to be amazed at the sorts of nefarious individuals walking freely. The ability to smell a rat comes from years of exposure to the odor. Usually, it’s just a hunch. Then you do some digging and find past lawsuits in which both parties settled out of court. A recent example would be Momentus, a firm whose founder had been in a lawsuit we unearthed doing Google searches.

While we needed to choose our words wisely for fear of being served a cease-and-desist, we knew something was rotten in Denmark. It was. Months later, the SEC charged the company and the Founder with misleading investors.

An article from The Verge about SEC charging Momentus with misleading investors.
Credit: The Verge

Traditional background checks can’t uncover these types of problems, which means we spend a great deal of time performing due diligence using Google searches. Then we learned about a fintech company called Ferret.ai.

About Ferret.ai

Click for company website

Founded in 2020, Santa Monica, California startup Ferret.ai has taken in $4 million in seed funding to develop an app that helps businesses and professionals check and monitor the backgrounds of their connections. You’ll find many startup success stories stem from founders who create a product or service based on their own needs and experiences. Founder and CEO Rob Loughan is a serial entrepreneur with plenty of success stories under his belt who once dealt with an investor who tried to steal one of his companies. This individual was hardly suspicious having been offered as an introduction by a Top-3 investment bank. No background checks would have raised suspicions which is why Ferret.ai isn’t another background check application.

The Problem with Background Checks

Online background checks vary in their usefulness because there’s no barrier to entry. Anyone with a website can claim to offer background checks and serve you up some canned content they screen-scraped from a public database. Besides, the sorts of use cases that Ferret.ai is targeting aren’t applicable to background checks. They’re focused in on “relationship management,” something far more sophisticated than just surfacing someone’s parking tickets. The starting point is exclusive access to a database of information that’s used by more than 8,000 banks to satisfy the strict know-your-customer (KYC) and anti-money-laundering (AML) regulations that differ by jurisdiction.

Mr. Loughan realized there was a need for Ferret.ai when he found himself using these databases on a regular basis. He was privy to that sort of thing because he was an investor in the company that offered the service. When the CEO decided to sell the company, Mr. Loughan proposed that they turn into something much bigger. That’s when Ferret.ai was born. They plan to augment exclusive access to this database of knowledge with some artificial intelligence algorithms that can provide supplemental information in real-time.

Ferret's Exclusive Worldwide Data
Credit: Ferret

Given the founder’s pedigree of having built and sold successful software companies, we have every reason to believe that the final product (it’s currently in beta) will be something that ticks all the boxes.

Financial institutions already have access to platforms that uncover nefarious individuals who have been flying under the radar. That use case extends beyond big banks to all corners of the finance industry including our own needs mentioned earlier – to flag company management teams that have a track record of failures. Where we think this offering might be particularly useful is for retail investors.

Ferret for Retail Investors

After several decades of researching investments, we’ve been most surprised by just how easily the SEC lets investors lose money. The laxing of crowdfunding rules is a great example. The platforms that connect investors with investment opportunities are not incentivized to scrutinize incoming ventures. And why should they be? The more companies that sign up, the more commissions can be realized. We’ve always warned investors not to get involved in crowdfunding, and we’ve been threatened with legal action numerous times by parties who didn’t like us sniffing around.

Potential problems for retail investors extend beyond crowdfunding to the over-the-counter (OTC) markets where countless companies trade, most of which eventually crash and burn, leaving bag holders in their wake. Many grateful investors have thanked us for warning them about problematic investments that were almost always the result of our own manual due diligence. One such company was Cannabis Science which we reported to the SEC, a complaint that fell on deaf ears. The CEO had a track record of shady behavior we unearthed through manual due diligence which involved searching lawsuits in Canada.

Screenshot on an article regarding the CEO of Cannabis Science
Thankfully, the company no longer trades – Credit: Manual due diligence

In exchange for our efforts, we’re often sent cease and desist letters. We also receive plenty of emails from concerned investors who find themselves underwater after getting involved with the wrong companies. And here’s what we always tell them.

Does it really matter if the company’s management team is acting maliciously or incompetently? In either case, the retail investor loses their money. Most individuals who run failed companies don’t have criminal records, but they do have a track record of doing something similar in the past, or are involved with individuals who have run similar ventures before. That’s why we think the app being developed by Ferret.ai would be extremely useful for retail investors who should be appropriately questioning any venture they get involved with. That’s especially true in today’s day and age where alternative asset platforms are running rampant.

The app being developed by Ferret.ai.
Credit: Ferret.ai

Going back to our earlier example of Momentus, their CEO had initially run into problems while involved in business activities abroad. In our CBIS example, the CEO had been doing bad things in Canada. Traditional methods of checking someone’s past are usually confined within the country in which the search is requested. We particularly like the international focus of Ferret.ai such that half our audience who hails from outside America can use the app as well.


Everyone always says “do your own due diligence” as if we all have the skills and resources to vet nefarious individuals. When companies trade on major exchanges with management teams who have records of running companies into the ground, it should almost be a mandate for tools to be made available that make it easy to quickly probe individuals offering up investment opportunities. We’re not sure what Ferret.ai will be priced at but we hope it’s accessible so that investors have some option since the SEC has clearly failed them in many cases.


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