Startup Evaluation Anticriteria

At VentureRocket Eurasia, one of our missions is to connect professional investors from all over the world with highly promising regional startups and facilitate the startups’ fundraising campaigns till they are successfully closed. 

To ensure the trustworthiness of the startups registering on the platform, as well as increase the chances they will be invested, we thoroughly check and evaluate all startups before they join VentureRocket Eurasia. 

The evaluation process is actually very much the same as the one of an experienced investor considering any startup. Having estimated more than 100 startups on the platform, our team prepared a list of important ANTIcriteria to follow while evaluating a startup.

It will come in handy if:

– you are an investor willing to choose a worthy project

– you are a beginner developing your startup estimation skills

– you are a startup willing to know which pitfalls to omit to increase your chances of receiving capital

The Custdev is Badly Defined

The Custdev (Customer Development) is the basics around which a product should be built.

It answers such questions as:

– Who are the startup’s customers?

– What problem does it solve?

– Is the problem currently pressing in the real world?

If a startup hasn’t properly defined these major things, hasn’t tested the product on real customers, and hasn’t built an MVP to test the idea within real market conditions, you’ll lose your money investing in it.

The Competitors Have Been Not Analyzed

If a startup says there are no or just a few companies offering a similar product, it can mean one of these things: 

a) the product is really unique; in this case, we’d recommend you to proceed with the startup;

b) the team hasn’t thoroughly checked the local and global markets to find competitors.

If your case is the latter, it is a red flag for investing in this startup.

The Financial Predictions are Not Realistic

This is probably one of the most common mistakes startups make due to the lack of experience. In most cases, the financial predictions of a startup are too optimistic. A really realistic forecast shows that the team’s approach is reasonable, and it fully understands all the risks in case of its failure.

The Investment Offer is Too Big

Another red flag that is directly connected with a startup’s inability to adequately estimate its needs and capabilities is the team asking too much money from an investor.

Ask for as much money as you need to develop your project.  Raising much money doesn’t mean you’ve got a solid product. Often, it means, a startup doesn’t know how much funds it needs.  Always be ready to answer the investor’s question “What do you plan to spend the raised capital on?” The lack of a reasonable answer is a very big “no” for investors.

The Startup Is Aiming to Join a Big Competition

The strategy of entering markets that have lots of competitors like the USA can be quite risky since the chances the startup will fail to outcompete other companies are pretty high.

Many startups are eager to fast enter the US market, forgetting that it is easier to set up a business in the local market. Joining the competitive US market is an expensive undertaking that requires in-depth knowledge of the region.

Join VentureRocket Eurasia – the first Central Asian startup co-investment platform that enables accredited professional investors to invest in highly vetted tech startups. 

If you are an investor, register here.

If you are a startup, join our platform here.