Startup Evaluation

How to evaluate a startup opportunity across founding team, market, product and business fundamentals, without mistaking a good pitch for a good business.

Team, market, product and business, in that order

Lessons

• Team, market, product, business - and why the order matters — At the earliest stage there is little business to analyse, so evaluation leans on the team and the market. As a company matures, the evidence shifts toward product and business fundamentals. (10 min)
• One percent of a huge number is not a market size — Top-down market sizing starts with a large industry figure and assumes a share. Bottom-up sizing counts real customers and prices. Only the second tells you anything reliable. (12 min)
• Retention and unit economics say more than the growth chart — Growth can be bought. Retention shows whether customers get lasting value, and unit economics show whether each customer is worth what it costs to win. (13 min)
• The pitch is designed to persuade you; the business has to persuade customers — A compelling pitch and a strong business are different things. Separate the story from the evidence, look for what is missing, and test claims before they shape your judgement. (10 min)
• Look for complementary skills, real commitment and a high learning rate — Team evaluation means examining whether the founders cover what the business needs, whether they are genuinely committed, and how quickly they change their minds when evidence arrives. (12 min)
• Ask why now, and what stops the next ten companies — Evaluating competition means understanding why this opportunity exists now, who else can serve the customer, and what would make this company hard to displace once it is working. (11 min)

All Investor Academy subjects