What we score, and why the weights sit where they do

The Kindling scorecard rates a public micro or small-cap on eight dimensions. Each dimension has four or five sub-criteria, each sub-criterion is scored zero to four against fixed anchors, and the composite is computed — not judged — from the weights below.

Publishing the weights is deliberate. A score a company cannot interrogate is worth very little to them.

The eight

Composites land in bands: 85 and above is an A, 70 a B, 55 a C, 40 a D. A sub-criterion with no evidence behind it is not guessed at — it is marked not-applicable, dropped from its category average, and it lowers the confidence attached to the whole score. A high score built on thin evidence should not read the same as a high score built on a full file.

Why management is the heaviest

At 22%, management and governance carries more weight than any other dimension, and roughly four times what discoverability carries. That ratio is the whole thesis of the scorecard.

In a large-cap, the institution outlives the operator. In a company with a hundred million dollars of market capitalisation, the operator is the institution. Capital allocation is not a committee process; it is one or two people deciding whether to buy back stock, issue it, buy a competitor, or pay down debt. Over a holding period of several years, those decisions dominate almost everything else on this list.

So the sub-criteria here are about alignment and track record rather than credentials. Does the insider stake amount to real money for the people who hold it, and which way have recent transactions run? Is there a record of doing what was said, or a record of promotional targets that quietly moved? How does the board look on independence, related-party dealings, and compensation? Is there red-flag turnover in the CFO or auditor chair?

None of that requires a meeting to assess. All of it is in the filings.

Why discoverability is the lightest

Liquidity, research coverage, shareholder base and IR footprint together carry 6%.

Not because they do not matter — a fund that cannot build a position will not build one, whatever it thinks of the business. They carry little weight because they are the most fixable and the least diagnostic. Thin volume tells you a company is small and quiet. It tells you nothing about whether it is any good, and it tends to resolve on its own once the other seven dimensions are in order.

Weighting visibility heavily would also invert the causality we think actually runs here. Coverage tends to follow investability rather than produce it.

The middle: what the numbers can and cannot say

Financial quality (18%) and balance sheet (14%) are where the arithmetic does most of the work — profitability, margins against the industry, cash generation, returns on capital, leverage, dilution overhang, runway against burn. These are largely computable, and they are the least arguable part of the scorecard.

Moat and market position (14%) cannot be computed. Is this a leading share of a small, definable market, or a small share of a large one? Is the niche growing? And a criterion that surprises people: can a generalist understand the business in one read? Complexity is a real discount in small-caps. An investor who cannot explain the company to their own investment committee will not carry it there, however good it is.

Risk and concentration (8%) is looking for the things that make a business fragile rather than merely small — a customer above a quarter of revenue, a single supplier, one product, one region, an open regulatory or going-concern question.

Equity story (10%) and disclosure (8%) are about legibility. Whether the operating metrics investors need are disclosed and trended. Whether there is a stated, credible plan for the cash the business generates. Whether the website, the deck, the filings and the calls tell one story. Whether non-GAAP adjustments are reconciled and reasonable or simply flattering.

What this is not

It is not a valuation. Nothing in the scorecard asks what the company is worth or whether the stock is cheap — that is the investor's job, and it changes daily.

It is a measure of how ownable a company is: whether a serious investor doing the first hour of work finds reasons to keep going or reasons to stop.

The basic scorecard is generated from filings and market data and costs nothing. The full assessment goes considerably deeper, and most of what it needs cannot be read off a 10-K — so it starts with questions only the company can answer.