How do I evaluate a startup?

Here are the things I look for in a startup:

Team: previous successful startup founder experience is ideal. For first time founders we look for grit, ability to learn, ability to apply knowledge, comfort with uncertainty, honesty and transparency.

Product: the product should solve a clear problem. While founders should have indepth knowledge about their product, they should be focused on the problem they are solving. Customers don't buy product features, they buy products which solve a problem they have.

Data: this is becoming increasingly important. Good data is notoriously difficult to collect in healthcare. A good data gathering and processing strategy is a big advantage.

Why now: Market readiness is an important predictor of success. Founders should be able to answer, "why has this not been done yet?". What has changed that makes this possible?

Business model: generating recurring revenue is ideal. The model will likely change but we look for founders who have thought about how to grow revenue exponentially.

Competition: be wary of founders who claim to have no competition. Ideally there are a few competitors with no clear market leader.

Traction: as founders should validate their idea before they build, they should have "some" traction. Early stage companies, especially biotech/ pharma often will not have revenue and thats okay. In the absence of revenue; pilots, letters of intent and an established relationship with potential buyers is helpful.

Market: the market needs to be large enough for a 100x growth potential. As we look for a minimum 10x return on investment, the market needs to have room for this. A growing market is ideal, a new (non-existent) or stagnant market are both problematic.

Regulatory: the founders need to know if regulatory approval is required. If so which class (I, II or III) ? What is the cost and how long will it take? We will talk about different regulatory classes in a future newsletter.

Risks: the founders should be forthcoming with potential risks/barriers and how they will overcome them. I would generally dig a little deeper here, a red flag is if they deny any risks.

Intuition: we believe in a structured approach outlined above, we use our own experience and bring in our network as needed to obtain the answers to the above questions. After our structured approach we factor in our intuition before making a final decision.

Feel free to reach out if there are some topics you would like me to cover

Sincerely,

Rishad