As an angel investor, due diligence is one of the most critical aspects of the investment process. With pre-seed and seed level investments being pre-revenue and sometimes even pre-formation, it can be challenging to qualify the opportunity based on financial metrics alone. This is why it's crucial to look beyond the numbers and focus on other meaningful qualifications, such as the leadership team, their ability to execute product development, and their go-to-market strategies.
The leadership team is often the most significant factor in the success or failure of a startup. It's essential to assess their background, experience, and track record to determine if they have the skillset necessary to lead the company to success. You should also look for a team that is well-rounded, with a mix of business, technical, and market expertise.
Next, it's essential to understand the startup's product development and go-to-market strategies. You should assess their product roadmap, as well as the timeline and budget required to bring the product to market. Additionally, you should assess their go-to-market strategy, including how they plan to reach their target market, how they plan to generate revenue, and what their marketing and sales processes look like.
Finally, it's crucial to consider the competitive landscape and market opportunity. What sets the startup apart from its competitors, and what are the key trends in the market that could impact their success?
In conclusion, due diligence is a critical aspect of angel investing, especially when investing in pre-seed and seed level startups. By focusing on leadership, product development, go-to-market strategies, and market opportunity, you can reduce your risk and increase your chances of success. If you're interested in learning more about angel investing, sign up for Evolution Accelerator's free introduction to angel investing class on February 15th.