When making an investment decision as an angel investor or a venture capital firm, the challenge is to set aside all the personal biases and emotional attachments and try to make a rational assessment.
Recently, I had to make such an assessment of a start-up for a venture capital firm, and I recognised that there’s not much information on the internet showing how to properly do this. Most resources cover the financials, and the metrics to look for. And obviously, those are not the only things you look at when assessing a startup.
That’s why I wanted to share the approach I built along with the document I delivered; in case it helps someone out there who needs to do this type of assessment.
Please note this assessment was done with the following constraints:
- The focus of the evaluation was everything but the financials, as the financial assessment would be done by the finance team at a later stage.
- The assessment had to be done as a complete outsider, without access to any real company data, and without speaking to the co-founders.
- Where information is not available, that section is covered by specifying questions to ask the co-founder team.
The skeleton of the document goes like this:
- Strategic Assessment
- Business Model & Value Proposition
- Competitive Landscape
- Product-Market Fit / Potential
- Growth Strategy and Tactics
- Execution Assessment
- User Experience Analysis
- Business Evaluation
- Work Methodologies and Tools
- Conclusion and Investment Recommendations
And here is the assessment deck: