Things to look at in a start-up company:
1. Don’t pay too much attention to what industry the startup is in. Great startups can come from any industry.
2. Look at traction. Traction usually means some revenue is coming in. In some cases, it can mean other things.
3. In social media companies look at active users, rather than total users.
4. Check, how much progress has the company made since launch.
5. Look at the sales graph. How fast is the company growing? What catalysts for growth are there?
6. If a startup doesn’t provide sales and growth details, it could be a bad sign.
7. How much money has the company raised previously and how much traction it picked up relative to the money raised.
8. Have a closer look at companies that have managed to get significant traction without raising outside money.
9. Read carefully over the deal page, which should have most of the information you need to make a decision. Look at the startup’s slide deck, check out the company’s website, search on Google, YouTube and social media sites.
10. Equity crowdfunding deals, always have a Q&A section where potential investors can ask founders any question they want. And all of these discussions are publicly viewable, so it’s a terrific resource. If you’re considering investing in an equity crowdfunding deal, definitely take the time to review this section. It is your best shot at getting to know the founders. How they field questions from potential investors can tell you a lot about the company.
Sven Franssen