Evaluation varies by stage. Pre-Revenue Startups: - Founders' Financial Savvy: Gauge the team's ability to manage funds and forecast finances. - Funding and Runway: Analyze initial investments, grants, and current burn rate to assess how long the startup can operate before needing more funds. - Revenue Strategy: Examine the feasibility and detail of plans for monetization and growth. Post-Revenue Startups: - Cash Flow Analysis: Review financial statements for revenue growth versus expenses to evaluate sustainability. - Profitability Metrics: Check indicators such as gross and net profit margins to assess operational efficiency. - Growth Consistency: Monitor month-over-month customer growth and market expansion to verify scalability.

I guess you don’t. Financial stability comes much later than the business model, product market fit and your conviction about the product. First, we assess the business model. Any paying customer is a definite positive. Product market fit will tell us that people are willing to pay for the product. On the other hand, user engagement and user growth are also indicators showing product fit. Second, the current burn rate to see if the money is being used judiciously. Depending the stage in which you invest the investment will go towards building product features or marketing for customer or user acquisition. The third and softer aspect is your gut feel about market and founders and their ability to build the product.