Evaluating Startups: Art, Science, or Just Good Sense?
Steve Procter
Startup Idea to MVP, Done By You - No Developers Needed ? Gipity Founder ? Tech Entrepreneur for 29 Yrs (Zero→￡Mil ARR, Twice) ? Now Helping the Next Generation of Founders
Startup Investing: Art or Science?
For those angels and HNWs new to startup investing, evaluating a startup will feel like both an art and a science. But there's still a method to it, even if it seems more like a dash of intuition and a sprinkle of analysis.
The Initial Quick Check
Take a good look at the founders. Do they scream competence? Do they know their market? Are they ready? If something feels like it's missing, even the best idea might as well be on the shelf (or be with different founders).
Assess the business model, market size, valuation, and deal terms. You're after substance, not just style.
Due Diligence: Not Just for Show
Due diligence isn't just industry jargon. Get in there. Check that Companies House registration, delve into financial forecasts, and do more than skim those shareholder agreements. Think Sherlock, not your Sunday afternoon crossword.
Asking Those Essential Questions
These are big ones: Is the problem real? Does a market exist and is it big enough? Does the business strategy actually make sense?
Are their values aligned with yours? It's about building something meaningful, not just counting pennies.
Investing in People: The Heart of the Matter
If you're not fond of the founders or their vision, it's best to walk away. You're backing the people as much as the business, some would say more. So make sure you're on the same page.
Crafting Your Investment Strategy
For those brave investors ready to dive in, remember: investing at the very early pre-seed and seed stages is personal. Listen, read, but follow your instinct. Build your style, and be careful if others try to tell you otherwise.
Beyond Capital: Partnerships That Count
Investing is more than just money. Meet the founders, even if it's via Zoom. Trust your gut. If something's off, it's off.
Your Investment Checklist
Join the l2o Network: We're Here for You
Our private network of angel and HNW investors is about collaboration, learning and growth. And of course, supporting great founders with great ideas.
Onwards and upwards, together!
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Steve
About Steve Procter +?l2o?Investor Network
???Steve Procter: as a veteran entrepreneur with 25+ years of running my own tech startups and advising other founders, I am dedicated to supporting?l2o?members with a consistent, curated flow of hand-picked opportunities in early-stage UK tech startups* that closely align with your investment aspirations.
???Weekly Discovery: keep an eye on this newsletter for my regular insights on early-stage investing and what I see around me in the pre-seed and seed tech startup world. Plus a regular link to the?teasers for my latest pre-selected startups.
???Join the?l2o?Investor Network: as a seasoned or emerging angel or HNW investor,?l2o?is an exclusive, free, invite-only platform, designed specifically for you.?Learn more?and set up a discovery call with me to discuss?membership.
???In-Depth Investment Insights: as a member, get an inside look at our hand-picked deal flow with deal memos, pitch decks and regular traction updates.
???Collective Intelligence: with?l2o, you retain complete control over your investment decisions, and should any deal catch your eye, you can choose to interact directly with the founders or tap into our private investor community. Here, you have the opportunity to collaborate with like-minded investors, share insights, conduct due diligence, and participate in syndicated investments.
???Become an Angel Scout: not investing? Play an active role instead in expanding the?l2o?network by spreading the word and enjoying part of the success. Connect with me on?LinkedIn?for more information.
*?supporting: UK-based tech startups & founders???pre-seed or seed???SEIS or EIS required???raising upto ￡1m?? focus: Saas ? marketplaces ? AI ? software ? digital ? B2B ? B2B2C ? some B2C ? lots more????excluding: hardware ? deeptech ? crypto ? gaming ? biotech ? life sciences ? anything non-tech
Smallprint
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CAPITAL AT RISK: Only invest if you can afford to lose all of your investment. Steve Procter and l2o are unregulated by the FCA. Use of the information in this newsletter or provided through the l2o network and membership of l2o is limited to those who are professional investors or "High Net Worth Individuals" or "Self-Certified Sophisticated Investors" as defined by the Financial Conduct Authority under the Financial Services and Markets Act (2000) "FSMA". High Net Worth Individuals or Self-Certified Sophisticated Investors are exempt from COBS 4.12 Restrictions on the promotion of non-mainstream pooled investments as defined in COBS 4.12.6 and COBS 4.12.8. Investment in early-stage companies is risky and risks include illiquidity, lack of dividends, future dilution and potential loss of capital. Investment in early-stage companies should only be done as part of a diversified portfolio. Reliance on any information in this newsletter or provided through the l2o network for the purpose of engaging in any investment activity may expose you to a significant risk of losing all of the money, property or other assets invested or of incurring additional liability. You should not construe any information in this newsletter or provided through the l2o network as investment, tax, legal, financial, professional, consulting or other advice, or an offer, invitation or inducement to purchase or acquire an interest in any of the companies presented. The information in this newsletter or provided through the l2o network is provided with the understanding that Steve Procter and l2o, their affiliates and any third-party service providers shall have no liability for any errors, inaccuracies or omissions within this newsletter or provided through the l2o network. In exchange for reading this newsletter or information provided through the l2o network, you agree not to hold Steve Procter, l2o, their affiliates or any third-party service providers liable for any possible claim for damages arising from any decision you make based on information or other content made available to you through this newsletter or provided through the l2o network.