You’ll get tired of hearing us say this, but evaluate a deal thoroughly before writing that check! Time and time again, we encourage investors to put in the time conducting “due diligence.” Luckily for Propel(x) users, we want to help you make informed decisions so we make the Evaluation process streamlined and centralized. Remember that Kaufman Foundation statistic? “There is an overall multiple difference of 5.9x for those with high due diligence compared to only 1.1x for those with low due diligence.”
But we understand angel investors are often juggling way too many obligations in their professional and personal lives. When there are multiple investment opportunities with equally compelling stories and stellar technology vying for your attention, it is almost impossible to dedicate time and effort into every step of their evaluation processes.
I introduced key elements of Phase 1 and 2 of the Propel(x) evaluation process in my previous platform spotlight posts. But as an investor, what if that cool machine learning startup you saw in our investor digest email a few weeks ago has already progressed beyond the Ask a Question and Collect Responses phases? What can and should you do now?
Getting to the Good Stuff
Unlike the previous phases of the evaluation process which run on set timelines (1 week and 2 weeks, respectively), the View Results phase is open until the startup management decides to close fundraising on the Propel(x) platform. This provides interested investors sufficient time to explore the complete outcome of a truly collaborative, crowd-sourced evaluation process. Investors can tell a deal’s evaluation results are available for review by looking at the Evaluation Timeline section of the docked vertical menu bar on any deal related page (Profile, Evaluation, Activities)— phase 3 will be highlighted.
View Results can be accessed in a couple of ways:
- Clicking on the View Results link from the vertical menu bar on any deal page, OR
- Clicking on the View Results link in the blue banner on top of the deal profile page, OR
- Clicking on the Evaluation tab directly
Investors who have spent time on the Evaluation tab during phases 1 and 2 will notice the layout and content of this page are completely different in phase 3. There is no longer any functionality to ask a question or refer an expert.
Investors who previously requested and were approved access to restricted startup content such as the pitch deck, deal documents, etc. will automatically have access to the complete results. Those who have not accessed any restricted deal content need to request access and get approval from the management first; although we would strongly recommend downloading all the deal documents first. This is as simple as providing your LinkedIn URL (or another professional bio website) if it is not already included in your investor profile. We want to protect startup information from potential competitors, and this step gives management the opportunity to check for themselves.
The results consist of 4 sections: just a fair warning, reading everything in one go could take you a good chunk of time, so we recommend pacing yourself and tackling one section at a time. Unfortunately at this time printing the entire page for an old fashioned reading experience is not supported by our platform.
Responses This section contains all the Q&A for management, their customers, scientific advisors, and third-party experts. To help you prioritize and focus, all answers are hidden in the default view so you can get a quick glance of all the questions that were answered for each category of respondents.
Once you hone in on a question that interests you and click the question panel to expand, all responses to that question are shown along with their contributors. For example, a question could have answers from customers A, B, and C, while another question may only have an answer from customer C. You’ll also see the respondent’s 1-line description when your mouse hovers over the contributor name next to an answer. Many of our respondents also included charts, graphs, and additional documents as part of their answer. You can download them by simply clicking on the file name.
For the third-party experts subsection, there may be management rebuttals following some question-answer pairs. For example, management may have provided a rebuttal to Expert X’s answer to question 2, but not Expert Y’s answer to question 2. This ensures that management can address concerns from an outside source whose opinion was provided without complete information.
Market Size Here we showcase all the addressable market size estimates provided by the respondents, from management, customers, scientific advisors, or experts. Often, a respondent may not have a numeric answer, and N/A is shown. But we encourage investors to read through the respondent’s rationale and methodology. An expert may find this startup’s technology to be amazing, but questions a viable addressable market in the near term–which would surely have an impact on potential investment returns.
Competitors This feature showcase all competitors named by the respondents, organized into a table for your easy comparison of management vs. other respondents’ assessment. Below the table of competitor names, you’ll find more detailed commentary on the competitive landscape from each respondent. Often there will be duplicates; this signifies a consensus around the key competition. When a competitor surfaces from other respondents that was not acknowledged by the management, investors should ask themselves why that is–could it be that the management is insufficiently knowledgeable about their competitive landscape?
Contributors Here you can see lists of all the participating respondents and their public information (e.g., LinkedIn URL)
There You Have It
This concludes our platform spotlight series on the features of our evaluation process. However, this does not mean you are home free! Now that we’ve given you the means of research and analysis, we encourage you to develop your own protocol to assess science and technology startups before making an informed investment decision. For example, after learning about a new deal either through our investor digest or on the main invest page, start following the startup, download its pitch deck and a few of its supporting IP write-up documents.
Have questions about the technology? Ask on the Evaluation page and watch for the NEW answer indicator while you can. Still interested? Read the full results when they become available. Our suggested framework is only a start–it’s up to you to work out a cadence of evaluation to do’s that work with your schedule and risk appetite. Happy angel investing!