Evaluating Venture Investments

Nine “Leaps of Faith” are identified to quickly evaluate and contrast venture-stage equity investments (“venture capital” investments).  They include:

  1.      Has the entrepreneur launched a start-up before?
  2.      Is the company’s product or service simply an improvement to existing practices or a disruptive technology?
  3.      Do they have a product?
  4.      What are the customers’ motivations for buying the product?
  5.      Do they have customers?
  6.      Are distribution channels and a sales pipeline in place?
  7.      Has the management team been assembled?
  8.      Is the business ready to scale?
  9.      What is the competition?

Once addressed, these questions provide investors with a foundation for further due diligence as they evaluate venture capital investments.

Carofin uses these nine questions to efficiently identify the stage of companies that are not consistently generating positive operating cash flow.





In the interest of accessibility, here are some terms that any investor should be familiary with.