How do you decide what to invest in?

This is a gross oversimplification but I use the Fisherman and the Pond method. I begin by evaluating the Pond the startup is operating in. Trying to figure out if this is a Pond I want an investment in. - Is it big enough (TAM)? - Can it be aggregated or scaled by an innovative new entrant (SOM)? - Is it diverse and deep enough so that the startup has multiple avenues to early traction? And if the answer is yes, I focus on the Fisherman. - Does she have Founder Problem Fit? - Does she seem to have a deep understanding of the terrain? - Has she found proper mates (team members & advisors) to support the journey? - Does she seem like the person who can navigate and innovate in this pond? Much more goes into this but this is the basics.

The most attractive startups offer disruptive solutions for very large TAMs with low barriers to entry during periods of growth. Key considerations include: 1) Market growth rate - Expanding markets offer more opportunity than stagnant or shrinking markets. 2) Market trends - Favorable shifts like digital transformation or sustainability can boost offerings. 3) Competitive landscape - Can the startup carve out space from incumbents or is the market saturated? 4) Barriers to entry - How difficult is it for new players to enter and build share in this market? 5) Macroeconomic factors - Consider risks like recessions, political changes, interest rates, etc.

When investing in startups, the founders are paramount; their passion, experience, and team dynamics pave the startup's path. Seek founders with past successes and genuine enthusiasm for their idea. A robust business model is essential, defined by a unique value proposition, a clear target market, a competitive edge, and realistic financial projections. The startup's impact on its industry is equally crucial; it should address pressing market needs and align with industry trends. By scrutinizing these facets: founders, business model, and impact, you enhance the prospects of fruitful startup investments

There is nothing fancy on how I decide what to invest in. 1) We invest in businesses including my CFO/CPA of which we believe in, and maintain an interest for a specific niche market. 2) Lastly, we only invest in companies comprised of owners and C-suite executives we trust, and get along with. I follow the LTS principal (just made that up). Life too short.

Many respondents have focused on customer validation, traction, revenues. While this is relevant to retail and software, none of these pertain to the success of regulated therapeutics and diagnostics companies. Financial returns to life sciences venture investors in the forms of IPO or acquisition typically occur many years before the company’s first product is approved by regulators like the FDA and sometimes before human clinical trials even begin. Large markets can intimidate both investors and acquirers. Conversely, companies developing treatments for rare/orphan diseases requiring smaller, shorter trials, but enjoying longer market exclusivity (and presumed higher pricing/reimbursement) have been favored by life sciences investors.

Management experience is my first target. Sector growth is my second consideration. Who are company’s distribution partners? Is the company currently generating positive cash flow and net income? Do they have realistic 2 year annual projections? Who are their legal and accountanting team?All of these must be considered before investing Venture Capital.

🎯 Assessing Market Potential 🚀 🌐 Market Size Matters: Evaluate the total addressable market (TAM). Seek startups targeting substantial, growing markets. 🎯 TAM vs. SAM vs. SOM: Understand TAM (Total Addressable Market). Focus on SAM (Serviceable Available Market). Assess SOM (Serviceable Obtainable Market) realistically. 📈 Growth Trajectory: Analyze market trends and growth projections. Look for startups aligned with market evolution. 🤝 Customer Pain Points: Identify startups addressing critical customer needs. Evaluate the urgency and demand for solutions. 🔍 Competitive Landscape: Examine market competition and barriers. Seek startups with unique value propositions.

1. A frequent misstep we see in pitch decks, is to report an industry’s total revenue as the TAM. It creates distrust, as often times the products being built are not replacing the key players in the industry, but rather serving them. 2. To avoid misreporting, a “bottom up” approach can provide a more reliable figure, starting with the number of potential customers the product can serve, and estimating the willingness to pay for that product over time (and as the product evolves). 3. (Good) investors recognise that the most disruptive startups address a market that does not exist yet. Hence, founders can communicate their hypothesis on why the market size will increase over time. Eg. new users entering the market, increased budgets…

When it comes to market (or opportunity) sizing, I'm a fan of bottom-up calculation, ie. building conviction on both the size and scale of potential customers, as well as the price points where customers are willing to pay for it. My personal sweet spot is reaching conviction in paving a clear path to reach >100m annual revenue opportunity

I usually focus on a Founder that is passionate about a product, and has the right balance between market knowledge and customer insight to build the right product. I also believe that a great startup, rather than a clear focus, has flexibility to adapt and build the market fit as it goes.

I mostly go with the Team first, in the initial days, it's the team who drives the company, whether they have been able to raise or not, sticking towards the goal is even more important.

Some key questions to assess traction: 1) Does the product solve a real user need? 2) Are initial customers responding positively? 3) Is revenue increasing over time? 4) Has the startup achieved critical milestones like launching an MVP or securing marquee customers?

🚀 Evaluating Team and Traction 💼 👥 Stellar Team: Assess the founders' expertise and passion. Look for a balanced and complementary team. Seek a track record of execution and resilience. 📈 Traction Signals: Examine customer validation and feedback. Analyze revenue generation and growth trends. Seek startups with evidence of product-market fit. 🧠 Advisory Support: Evaluate the startup's advisory board. Strong mentors can provide valuable guidance. 📋 Lean Canvas: Review the startup's business model and strategy. Assess the clarity and viability of their plan. 🌱 Customer Development: Understand how the startup engages with customers. Look for iterative learning and responsiveness.

Even before we talk about Product market fit and start evaluating the business from different lenses or analysing various metrics. The most important part is to identify Founder Market(/Industry) Fit. Investment/helping someone with capital means taking betting on the person who just not have ability to build business but also have grit to stay in market riding the roller coster. Personally for me I look for entrepreneurs who have attitude of not giving up.

In the pre-seed/ seed stage, its all about the team. This is the no. 1 thing which I look at. 3 things in it mainly - 1) What is the founder building? 2) Why is the founder building? 3) Founder-Startup Fit Apart from the above I also like to know - - How long have the founders know each other - Have they worked together before? - Does the founder have past management experience? - Do they have a strong sense of company culture? Industry Knowledge, Leadership, capability to execute? - What positions can they outsource? - Ability to think clearly, communicate clearly, sales capability, authenticity - How committed is this founder? - What are this founder’s chances of succeeding in this business—and in life? Traction is a good to have.

When looking at the “team” aspect of a start up it is easy to overlook how obsessed the team is with the “problem” they are looking to solve. Is this problem they are looking to solve a personal pain point they have experienced? Maybe it’s through their family business? When trying to determine if the founder is the right person to build or solve this problem, for me the answer to their “why” is a important indicator to evaluate how successful they will be!

"Team" is the most important factor when evaluating a startup for investments. Much of the evaluation is based on track record, domain expertise, communication and perceived commercial and technical skills... One reliable framework to assess teams is "founder-market-fit". In other words: does the team have the right skills/knowledge to win the market they are addressing. It is the Founder's job to demonstrate they are the best positioned to win that market. Another key consideration is whether or not Investors believe that the Founder will be able to attract great talent for hire. At the early-stages, it can be demonstrated by showing a dynamic and diverse co-founding team with complementary skills, and strong chemistry.

In the world of startups and venture capital, "Team and Traction" are two fundamental pillars that often determine the success of a company. Foundational Strength: A startup's team is the cornerstone of its success, with the skills and expertise to execute the company's vision. Investor Confidence: Investors look for founders and team members who demonstrate the capability to drive the business forward effectively. Progress Indicator: Traction measures a startup's progress and momentum, often quantified through metrics like customer acquisition, revenue growth, and user engagement. Market Validation: Strong traction validates the market need for the startup's product or service, indicating that customers find value in what is offered.

Focus on startups that can maintain uniqueness and create lasting barriers to imitation. Key questions to assess competitive advantage: 1) Does the startup provide something unique that competitors don't offer? This could be proprietary technology, special expertise, exclusive partnerships, or other differentiators. 2) Does the startup have any defensible barriers to entry like patents, copyrights, or network effects that prevent easy duplication? Strong intellectual property protects the business. 3) How easily could a competitor copy the startup's products or business model? The harder it is to replicate, the better.

In the fiercely competitive landscape of business, having a well-defined "Competitive advantage and defensibility" strategy is paramount. Distinctive Strengths: It represents unique attributes that set a company apart from competitors, such as innovation, cost leadership, or brand recognition. Protection of Advantage: Defensibility refers to a company's ability to protect and maintain its competitive advantage over time. Barriers to Entry: Building barriers such as patents, exclusive partnerships, or high switching costs can deter competitors from entering the market. Investor Attraction: Investors often seek companies with defensible positions as they are perceived to have a lower risk of losing their market edge.

Here, I prefer doing a sector landscaping and answering below Qs - 1) How unique is the startup? 2) Where do they fit in the landscape? 3) How many players are there in it? At what stages? 4) Room for a new entrant? 5) Key differentiator compared to existing offerings? And then I need to estimate that particular team's RIGHT TO WIN - 1) What delta improvement is in their offering? 2) What uniqueness are they providing? 3) Any unfair advantage which they have? 4) Why can this company win?

As someone who has sat on both sides of the negotiating table, if investors and founders don't walk away from the table thinking both could have "done a little better", then it is a bad deal. Neither side should "want to stick it to the other" - that is a recipe for mistrust and resentment. VC's with long and strong track records know this...

In the world of venture capital and startup investments, "Valuation and terms" are indeed crucial elements, often considered a game played by VCs and investors. Significance: Valuation represents the estimated worth of a startup and plays a crucial role in investment negotiations. Negotiation Game: Valuation discussions can be complex negotiations between founders and investors, each striving for terms that benefit their interests. Investor Perspective: Investors seek to strike a balance between getting a fair ownership stake and minimizing risk. Founder Perspective: Founders often want a higher valuation to retain a larger share of their company but must be mindful of not pricing themselves out of the market.

Since you want any one company to possibly return your fund, and since you will probably want to invest in 30-50 companies for your fund, you know something about the size of investments you should be making. If you want to be lead, then the valuation of the company will be perhaps 3-5x the size of your investment. If you want to be follow, then your investments can be a smaller fraction of the company and the valuations can be a larger multiple of your investment. You will want some of your investments to be Seed, have some reserves for follow-on Series A as well as new Series A investments, and some reserves for follow-on Series B investments. The fraction of the fund to allocate to early vs late investments depends on your fund style.

Partnering with an Investor, is the start of a multi-year relationship. For both Founders and Investors, the most critical question is whether the other party shares the same values as them. That comes before anything else. Beyond that, Founders should make sure that Investors align with the startup's mission statement, understand what is being built and can get excited for the company's potential. Founders must also make sure they pick Investors who have understood that they play a supporting act in the Founder's journey, and should not undermine her or his leadership.

Invest in businesses where you can add value and where you can play a meaningful role in the development of the company. Otherwise you are just along the ride. Startup and early stage companies demand active rather than passive investors.

When it comes to fit & alignment, there types of fit which I look out for are in the priority order as below - 1) Founder - Startup Fit - alignment between a founder's skills, passion, and values with a startup's goals and mission, crucial for success. 2) Founder - Investor Fit - when an investor's expertise, values, and resources align with a founder's vision and needs for their startup. This should match from stage, sector, exit outlook as well for both of them. 3) Product - Market Fit - When a product effectively meets customer needs, resulting in strong demand, satisfaction, and sustainable growth.

At the highest level, successful fit and alignment come down to the synergy of purpose-driven action. Fit and alignment is a journey of discovery, and successful discovery requires a mutual willingness to sacrifice control, enter with trust, and commit time to building a successful relationship. It's not simply "Value Proposition, Culture, and Partnership" (VCP). There is no authentic love at first site. What you should look for: From a founding team: (1) Action + Purpose (2) Alignment (Values) + Commitment (time) (3) Range (breadth of curiosity) + Tenacity (growth mindset) From an investor: (1) Values + Commitment (2) Clarity (decisiveness) + Engagement (responsiveness) (3) Expertise + Humility "To be clear is to be kind."

After working in the Art Market for 20 years, from auction houses to galleries and advising privately, the best advice for your Art Portfolio in my experience is to allocate roughly 80% to safe values (such as Picasso, even a drawing if you can't afford a painting), 15% to established names with a margin of progression (for example Pierre Soulages or Chu Teh Chun), and the remaining 5% for what we call "achat coup de coeur" - meaning you will follow your heart and not necessarily expect a return on this investment.

Committed to advancing Thailand as a regional hub for innovation and venture capital, we invest in companies with impactful value and innovation at their core, be it through their IP or pioneering business models. Collaboration and partnership opportunities drive our mission, propelling sustainable growth and fostering a dynamic venture capital landscape.

As a VC, we may see a company that is solid, but the founder was unable to communicate that to us, so everyone misses a great opportunity. Because we see so many pitches, it helps when we become invested through a great story - of course, the company and idea have to be very strong. An example: a founder approached me with a medical device. He was a doctor who was treating a new mother who was in her early 20s. After delivering her baby, she had complications that led to her death. Losing a patient, especially a new mother, was extremely distressing. This is what led to a massive pivot in his career -- to become an entrepreneur. I didn't learn this until several conversations in and it expanded the way I saw his commitment and passion.