15 Things to Consider When Analyzing A Start-Up
#1 - Experience
What is the experience of the founding team? Why is the team capable of achieving? We look for a founding team with relevant experience and execution capabilities.
#2 - Purpose
Why are they selling? - Understanding their purpose is important. We look for a team with the drive and passion that are investment ready.
#3 - Business Model
What is their business model and pricing? We look for companies that solve a problem for a validated target customer with strong earning potential.
#4 - Competitive Advantage
What is the product/service competitive advantage? We look for offerings with a unique selling point and sustainable competitive advantage.
#5 - Growth Opportunity
What is the total addressable market? What is the market outlook? We look for scalable companies operating in a growing market.
#6 - Key Assets
Branding, customers, social media, software, equipment, machinery, etc.
We look for businesses with a clear market strategy.
#7 - Customer/Strategic Partnerships
Who are their customers/partners? – especially branded names. We look for businesses with a validated product and proof of traction.
#8 - Competition
What are the key metrics in the industry? How are the competitors performing? We establish operating metrics to be monitored and analyze the competitive landscape per segment.
#9 - IP/Trademarks/Patents
Is the technology/product hard to replicate?
#10 - Supply Chain
Who are the suppliers? How big are they relative to their supplier’s other clients? Are there any bottlenecks with their supply chain partners? We look for companies that have established high-quality vendor partnerships.
#11 - Capitalization Structure
How much debt and equity has the company raised? What future equity or debt financing will be necessary?
#12 - Data Room
Request the latest 3 Balance Sheets, Profit & Loss, and Tax Returns.
#13 - Financial Projections
What is the company’s 3-years projection? What are the key assumptions? We look for companies with a healthy return on invested capital and a clear path to profitability.
#14 - Risks
What are the principal risks to this business? We look for businesses that understand and mitigate their risks.
#15 - Exits
What is the likely exit opportunity? Does it match your investment horizon?
We look for companies with a defined exit strategy that is attractive to potential acquirers.