Due Diligence 101 for Startup Investors (Part 2) - 5T Screening Checklist | Crowdwise Academy (313)

[@CrowdWise]

What are some of your favorite ways (or questions) for assessing whether the founder or CEO is worthy of your investment dollars?

[@antextra300]

As a startup founder this was really educational. Thank you. Good stuff.

[@privateeducationinsouthafr5477]

Superb and informative video for startup investors. Thank you

[@rockrecon]

Under TAM, 9:13, I’m curious to see examples of “huge” markets. Once again, this is one of my favorite videos thus far. Awesome checklist. Makes me want to invest more.

[@CrowdWise]

It's definitely not an easy question to answer, especially early-on! For example, when Uber started out, they focused on their "Uber Black" market of upper-level execs in specific locations like SF. Investors assessing the market had to have the vision that it could someday compete with all cab companies (and perhaps in the future, even person vehicles) in order to convince themselves of the market's potential. It wasn't just being limited to that small initial market. Jason Calacanis often talks of this model (i.e. top-down, starting with a niche market that has customers with a lot of money, or a "beachhead"), before going more broad. i.e. Starting with Uber Black (higher margins), before rolling out UberX, UberEats, and other lower-margin but more broad business models. Compare this with a bottoms-up approach (if they had tried starting with a lower-margin business like UberX/UberEats, then scaling up). I think the key thing for investors to ask is this: is this initial market truly a beachhead into a broader overall market, or is this initial target market really the founder's grand vision for the business? Honestly, I think a lot of times even the FOUNDER may not know the true potential of what the future market may look like. Another reason why investing in superstar founders is so key in early-stage investing. My two cents :)

[@kyser3ify]

So they do all this due diligence and use metrix to try to get a better result. Yet failed founders get second and third chances even though the data says they shouldn't. So ok. I get it.

[@CrowdWise]

Hi Dev - the data around failed founders isn't quite as simple as saying "no" to those investment opportunities. While founders who have had past successful exits are statistically more likely to have continued success, there is basically little to zero correlation for founders who have had past failures. So some of them may continue to fail, but others who failed in the past will have likely learned something and may still succeed in the future.