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Product people make great startup investors.
Why?
Because evaluating an early-stage startup looks a lot like evaluating a new product launch.
Time for a thread
https://abs.twimg.com/emoji/v2/... draggable="false" alt="⬇️" title="Pfeil nach unten" aria-label="Emoji: Pfeil nach unten">
Why?
Because evaluating an early-stage startup looks a lot like evaluating a new product launch.
Time for a thread
1. It& #39;s all about the users.
Do you have product-market fit?
Look for:
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen"> Steady or accelerating user adoption
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen"> DAU / MAU growth
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen"> High retention / low churn
Look out for:
https://abs.twimg.com/emoji/v2/... draggable="false" alt="❌" title="Kreuzzeichen" aria-label="Emoji: Kreuzzeichen"> Usage metrics that flatten/decline after initial adoption. May indicate lack of staying power.
Do you have product-market fit?
Look for:
Look out for:
2. It& #39;s all about the money.
Do you have business model-user fit?
Look for:
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen"> High willingness to pay
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen"> Short sales cycles
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen"> High gross margins
Look out for:
https://abs.twimg.com/emoji/v2/... draggable="false" alt="❌" title="Kreuzzeichen" aria-label="Emoji: Kreuzzeichen"> Long sales cycles with low conversion
Do you have business model-user fit?
Look for:
Look out for:
3. It& #39;s all about the market.
How big can we grow?
Look for:
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen"> Products that compete against non-consumption. These unlock the highest growth opportunities.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen"> Natural adjacencies
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen"> Natural network effects
Look out for:
https://abs.twimg.com/emoji/v2/... draggable="false" alt="❌" title="Kreuzzeichen" aria-label="Emoji: Kreuzzeichen"> Small markets with several lookalikes
How big can we grow?
Look for:
Look out for:
4. It& #39;s all about the distribution.
Are we able to effectively reach our target audience?
Look for:
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen"> Unique assess to a captive user base
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen"> Steady to accelerating sales funnel
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✅" title="Fettes weißes Häkchen" aria-label="Emoji: Fettes weißes Häkchen"> High LTV / CAC
Look out for:
https://abs.twimg.com/emoji/v2/... draggable="false" alt="❌" title="Kreuzzeichen" aria-label="Emoji: Kreuzzeichen"> LTV / CAC compression with later cohorts
Are we able to effectively reach our target audience?
Look for:
Look out for:
If you enjoyed this thread, throw me a quick follow. It& #39;s much appreciated.
