How to assess the potential of a startup and when to invest in one?

Having gone through this process myself, assessing a startup starts from the beginning; the stage called Kickoff. During this stage, one must assess the whole startup idea, concepts, technology, financials, tracking of the timeline, and the capabilities of the individuals involved. This part is really crucial and should give you and the startup a really clear idea about the project and how serious it is to meet the deadlines since you will be tracking the milestones and the startup will surely expect that and act accordingly. After the initial Kickoff check, one should look at the strategy and objectives extremely thoroughly. Research their current market knowledge, potential growth of their trends, team members and their effectiveness, initial capital available and the ones to come, the viability of idea and concepts, startup market knowledge and understanding, and how much risk is the startup going to take. The results of these few ideas should yield how well the startup should be and will be. Nevertheless, if the startup is extremely new to the market segment, lacks significant capital, does not have really good focus, and a limited and dysfunctional set of team members and partners, then one should be cautious in working with such a startup! The startup pitch (having done one myself) is really important; it does being the most important aspect of the idea, financials, and key points to the potential investors. The 30-minute-long pitch is the startup heartbeat. The investors can be encouraged by it or completely turned off by it. Thus, the time and effort put into the pitch are really well worth it! One very crucial part of the startup is the intellectual property. If a startup has a potential registerable IP and the IP looks like it can be a standard for an existing or rising industry, then the startup has a goldmine. There are other aspects to how to view a startup and assess it but the mentioned are really the ones that I concentrated on and succeeded in making mine take off. If you are asking about the timing of when to invest, I would wait for the pitch and the research of the startup. I hope this helps.

When capital for startups is readily available at scale, it makes more sense to go big, fast and make mistakes than it does to search for product/market fit. The amount of customer discovery and product-market fit you need to do is inversely proportional to the amount and availability of risk capital. Still, unless your startup has access to large pools of capital or have a brand name like Katzenberg, Lean still makes sense. Lean is now essential for companies and government agencies to deliver innovation at speed The Lean Startup isn’t dead. For companies and government the next generation of Lean – the Innovation Pipeline – is more relevant than ever.

Different investors have different priorities when assessing a potential startup investment. In an investor presentation or pitch deck the entrepreneur will summarize the key points about the business that they think are relevant to investors. The pitch deck provides a useful starting point for evaluating a company, but investors should also take the time to review the other materials provided in the data room.

The length and content of a pitch deck will vary depending on the stage of the company. Some of the common factors that seasoned investors assess in a pitch deck include:

• Product, Team, Differentiation, Business model ,Distribution, Customers, Financials, Market size and Competition
• Term sheets are intended to provide a simplified summary of the key terms of the investment, but they still contain a number of technical items. In the world of early-stage investing, term sheets contain information relating to:
  • Amount of investment (how much the company is looking to raise)
  • Valuation (related to both of these are figures such as ownership percentage being offered to investors as well as the price per share)
  • Type of security offered
  • Voting rights
  • Anti-dilutive provisions and registration rights
  • Dividends
  • Liquidation preference
  • Conversion rights

feasibility study and conduct due deligegence with experts

Thanks for invitation, 

Agree with the answer of Mr. Ghassan ElKhateb which I do believe covering the subject.

actuallt you can start up by the following 1- you should study market growth rate for the potential business you are going to start..... you can reach it thru (google analytics) 2_ you should use SWOT analysis to measure your (strength , weakness , threats and opportunities) 3- understand well resources avaliable with you (funds , manpower . experince , and all capabilities you have) finally u should take an advices from peaple have the same conditions and you can trust them. thanks

Evaluate the concept Idea after a deep Analysis for the Market. Then look to the investors who are participating in the co. Then the value proposition of the products or services. Using Corporate Valuations methodologies to have close picture. This is in my opinion.

For successful risk assessment, market behavior and activity must be studied in the region where you operate