Analysing start up Tech

Companies
Business Model
• It has to be product oriented
• The target market has to be focused
• The product and the market should be defined clearly
• Time to market of the product needs to be evaluated
• Business Model has to be growth oriented
• The business model needs to be “born global”
• The product that the model is build upon should have considerable impact
on the way “things are done”
• Extensive marketing plan with emphasis on proven strategies, cost
effectiveness and planned tactics.

Financial Analysis
• Revenues for the past 12 months.
• Expected revenues for the next 12 months.
• Expected revenues for the next 5 years.
• How will the gross profit margins change over time?
• Pre money valuations of start ups in the same market?
Other factors
• Quality of the business plan.
• Strength of strategic partnerships (LOIs, exclusive R&D, licencing,
exclusive partnerships & signups.
• Intellectual property ( patents, pending patents?)
• Scope of intellectual property (how much of the value chain does it
cover)
• Trademarks
The team
• What is the entrepreneurial experience?
• Does the team cover technical and business expertise?
• Is the team credible and professionally qualified?
• What are the positions they have held before?
• Is there a market related member with credible contacts?
• How much time & money have they spent on the venture?
• Is the effort lead by one person or a team?
External Factors
• Global annual revenues of the market and it’s sub sectors.
• The growth rate of the market that the product is aimed for.
• Customer satisfaction of other solutions in the same market.
• Customer readiness and interest of the product.
• What if a large company put its resources to build a similar product?

User Metrics
• K value- How many users are coming in through invites of existing
 user?
• Mobile Traffic- The number of visits from mobile/total visits
• Cohort Analysis- How many users keep using the product after joining
over a period of time?
• Churn- Users who leave/total users

Customer Acquisition
• Acquiring cost-new users acquired/total amount spent
• Payback- number of orders to recover cost required to acquire
customer
• Promoters, passives and detractors-Customer satisfaction based on
recommendation level on scale of 1-10

Sales Metrics
• Magic Number- Net growth of subscription revenue over 2 quarters
x4 / total spend on sales and marketing
• Basket size- average price of an order
• Order Velocity- The time taken by a customer to make a repeat
purchase
• Average sales cycle-time from contacting customer to time of
purchase averaged for all customers
• Life time value- total value of a customer over the life of relationship
with the company.

Market Metrics
• Total addressable market- the total amount of money spent in a
startup's defined space.
• Average wallet size-the total amount a customer can spend over a
period of time in a category of products.