Focus your evaluation and reduce the list to 3 startups.
Refine your due diligence abilities for a more meticulous analysis of each startup on your new list.
Perfect the method for registering your ultimate investment decisions and offering detailed rationales.
Step 1: Choose the top 3 startups from the list of 6 shortlisted startups.
You will now have a shorter list of 3 startups for your FINAL evaluation.
Step 2: Review feedback and take notes
Start by carefully reviewing any feedback you’ve received. Make a checklist of all the areas that need revision.
Step 3: Re-Evaluate the startup and provide an honest rating
Give the startup an honest assessment in the form of a final rating on a 1-5 scale (1- not eligible for investment 5- attractive investment). Use the information you have already gathered and carefully consider all factors. State your rationale in a clear, compelling manner by stating reasons that you believe would make this startup a worthwhile consideration.
Early-stage investors and venture capitalists — way before they see a working product — need to see solid evidence that the new business idea has the potential to grow quickly.
Four factors need to be analyzed when assessing the potential of a startup:
The demand side — the problem, or initial conditions
The supply side — the solution and offering
The connectors — drivers, insights, or reasoning as to why the ‘assumed’ company, will successfully connect the supply and demand sides and create economic value
The beliefs — the positive emotions, the excitement around the company and its people
Step 4: Make the required revisions
Within the confines of the research criteria, make the necessary adjustments:
Investment Rationale: Clarify why the startup is a good investment.
Business Metrics: Ensure all data is current and accurate.
Risks: Reassess the risks and mitigation strategies mentioned.
The following example, adapted from the guidance for analyzing startups focusing on AI productivity tools for white-collar jobs in high-potential tech ventures (HPTV), provides a clear model for effectively gathering and analyzing specialized data. This serves as a benchmark for the quality and detail of the research output expected.
AI Productivity Inc. is a fictional entity created for illustrative purposes in this example and does not represent an actual company.
