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BOTTOM-UP ASSESSMENT FOR AN EARLY-STAGE STARTUP

I search the world for the best talents to share expertise with global founders that are on the edge of mastering entrepreneurship. This time I am excited to share expertise from Olga Duka, a General Partner at Impro Ventures. Lots of thanks to Catherine Yushina for making it happen! Olga a detailed guide for bottom-up assessment for early-stage founders as well as tons of must-have resources that will blow your mind.


Treat it more or less as a list of questions to think about and be able to answer over time – or learn to ask better questions.

Minimal Viable Team

· Founders competitive angle: a unique combination of founder’s superpowers that would give an edge over competition short term and long term; eventually the competitive product shape will be defined by a mix of soft & hard skills that no one else is able to copy.

· Founders’ stakes on the business, risk-taking appetite and a decent understanding of venture type of growth, general expectations on business & their own interests & talent development – co-alignment (say one founder is in it for a decade, two more don’t see themselves in a business longer than for 5 years or desire to grow other skillsets in the future and shift from say CTO to CDO), potential risks and conflicts evaluation, focus and responsibility checks

· Team feasibility of turning an idea into an early product: skills, competencies, SME, network, and resources available for the product search / R&D / ability to formulate reasonable assumptions and test them efficiently.

· Team feasibility to find a business: team resources to verify a sustainable business model for the chosen product in the target market, within macro/micro, competitive environment, and relying on certain mega, macro, and micro trends

· Organizational bottlenecks / efficient access to talents & resources

· Business processes setup & management


All of it would bring an assessment of early rounds. The pre-seed stage assumes investments in a uniquely positioned talented team that can formulate reasonable assumptions, delivering evidence-based testing of assumptions to find viable product, with a proven efficient execution, resilience, and ability to learn from experiments quickly, within a chosen market.


Financial Feasibility & Transparency

· Verified understanding of strategic & tactical financial planning, as to how with what resources and under what time limit the team is capable to achieve first reasonable product and reproducible business metrics (individual per industry/market/potential business model).

· Reasonable early payments that prove the demand are of more meaning than vanity metrics.

· Some early validation or estimates of unit economics, channel capacity, and assumptions for most scalable business models or defined operational bottlenecks also of more importance, while it all can be done based on summary or landing page, rather than having coded MVP or likes in social media.

· Founder / outsource / service / advisor with target market competence in corporate finance, accounting, and tax, banking, compliance of business & beneficiaries, general budgeting, strategic financial planning, cap table design / assumptions, investment planning


Market Feasibility & MVP Assumptions

· Market model, channel capacity estimates, competition business models estimates & comparison, applicable business models range, including from other industries

· Financial model & achievable metrics in terms of business and in terms of investments

· Market entry scenarios and sales strategies

· Early channels of entry

· Market entry / business development roadmap & OKRs / target goals

· IT & infrastructure assumptions, scalability assessment, IT bottlenecks


Product Feasibility and Customer Fit

· Custdev assumptions or success

· Pre-MVP/MVP requirements

· IT & infrastructure requirements & scalability

· Early website, deck, style, design, look & feel outlined based on CustDev and definition of value prop that is being tested

· Unit economics assumptions / design / model

· Business model assumptions

· Operational bottlenecks


Sales Channels & Business Model Feasibility

· Reasonable sales channels assumptions

· Requirements to metrics of measuring channel unit economics & channel capacity

· Unit economics design / requirements / early metrics / assumptions for improving one

· Business model requirements / metrics to prove / achieve

· Organizational & budgeting requirements for the next steps in high / medium / low growth situation


IT & IP Feasibility & Defensibility

· IT assumptions & specifications over different stages of development – from early testing towards full spec on infrastructure, architecture, data privacy as well as scalability assumptions & visible bottlenecks

· Defensibility of IT

· IP rights & protections


Legal Feasibility

· Long term sustainable holding company legal setup

· Appropriate IP & pre-patents or patents registration or steps to one

· If licenses required – (a) reasonable competence over regulatory requirements within the team (b) assessment over an ability to acquire the licenses in the target markets (especially if it requires access to GR or special networks) (c) expected budgets at the stage when the license is required


All of the above brings us to:


Investable Shape

· Minimal viable team (founders & key team / corresponds to cap table & option pool)

· Financial feasibility & early setup

· Legal setup & due diligence over founders & business, current cap table

· Reasonable roadmap over the execution with expected expenses vs goals

· Key assumptions over market entry & investment strategy


Depending on the startup stage, there could be some metrics / assumptions / design / assessments of:

· Market feasibility

· Product feasibility

· Sales feasibility

· IT assessment / due dil / audit

· Patents and IP


In essence

· Either validate metrics as repeatable long term – almost never the case with pre-seed, and only part of metrics are valid for seed

· Or validate assumptions as reasonable & consistent with a business, that may turn into valid metrics with a good probability or bring important insights on product or strategy shift – both pre-seed & seed, especially when a founder is going to double down on spending money over the certain business area.


Here we discussed with Olga and Catherine tactics to Become Fundable for Startups



Some useful links:

Investors

3. Building your investor target list – a long list of useful links in this thread

4. OpenVC and Landscape Ventures - feedback about investors from other founders


Resources

1. Go Global World - Digital Silicon Valley Ecosystem for Global Founders. Founders help founders from around the world, representation in 30 countries, Go Global Acceleration program (USA). Huge expertise and connections on USA market as well as on Australia, CIS, EU, Africa.

3. GGW Global Chats:

3. First Pitches - an educational podcast

6. On decision-making in uncertainty; also check Annie Duke book

7. Forecaster - fintech modeling for your startup, simplified

8. Firstbase - one of many platforms that help register and set up a US company & banking quickly and on remote

9. Useful tools and frameworks based on Olga's 15 years of remote work experience


Alternative fundraising

2. Pipe.com, Clearbanc, Braavo capital (saas mobile apps & games), pollen.vc - to fund operational expenses with no dilution; B2B & B2C saas models; https://www.bridg.app – similar investment platform for SAAS startups from EU/Berlin

3. RUV investment vehicle model, raising from angels

4. Early-stage funding aka F&F *before* you've picked an idea for a startup – application works in butches, follow Avichal Garg for updates

+ crowdfunding, DAO, venture studios (see GSSN network), match-matching tools like Go Global World, etc – research your options and be sure that VC is indeed your fit.


Olga Duka


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