Have you tried to work as a VC Investor before landing an internship?
How to Land in Venture Capital #2 - Working as a VC Investor #1
My name is Conrad and I work as a Startup Analyst. I help founders and investors achieve their goals by connecting both parties to financing opportunities. Additionally, I love to provide mentorship to guide startups on how to secure funding.
If you want to chat, drop me an email at conrad.carbonell@iese.net
News on Iberian VC Investment Deals
First, let’s wrap up two of the the Iberian best VC deals that had happened during this past week:
Identify (DTX), a developer of a destination traveler experience (DTX) platform designed to improve the experience of travelers by giving personalized recommendations for destinations and activities based in Barcelona, raised €400k in a seed round deal led by Alva Ventures.
Sesame (HR), a developer of a HR software designed to improve the communication over teams based in Valencia, raised €23m in a Series B round led by PSG and GP Bullhound.
Working as a VC Investor
OK, let’s start with today’s post. Do you imagine how is it to work as a Venture Capital Investor before even being one? 🤔
There are 4 different ways to work as a VC Investor before entering a VC firm, according to Signature Block:
Building your own investment portfolio (real or fantasy)
Introducing promising founders in your network to investors in the same industry
Using your expertise (e.g. sector or business model experience) to advise startups in your industry
Publishing deep industry research or your unique investment thesis
In this post, we are going to emphasize the first one, building our own investment portfolio, and for that, we will be using this template to analyze a startup. Let’s start !
How to analyze startups
The Investment Memo Template
In order to build our own investment portfolio (1), we will have to do a due diligence on the companies we are evaluating. By focusing on early-stages (we don’t care a lot about financials), therefore, we should evaluate the following:
Company Overview
What is the company in one sentence
Team
Who is the team? Where did they come from (past experiences)?
Their expertise is related to the problem they are solving or trying to solve?Market Size or Opportunity
How big is the market? Is it growing rapidly or emerging?
What trends make this company possible?Problem
What's the problem? How does the team know?
Solution
How are they solving it?
Customer and Business Model
What is the product? Does it solve the pain point or need?
How are they approaching the Go-To-Market strategy? Is it feasible? Can this be scalable at 100x? What is defensible today or in the future (patents, barriers to entry)?Competition
Who are the indirect / direct competitors?
Why do we like this company relative to the field?Traction and Metrics
What quantitative progress has been made so far? Metrics such as CAC, LTV…
What are key business and product milestones over the next 12-24 months?Valuation
How could you evaluate the startup? Comparables? Financials?
Should we invest?
Why yes? and why no?
Here, the first company we are going to analyze: Genesy AI
Where to find this information?
To fill out the investment memo template, you would typically gather information from various sources, including:
Company Website: essential to know what the company is doing, an overview and a visualization of their solution and business model. It can provide also valuable information on the team and market positioning.
LinkedIn: useful for researching the team members. You can find their profiles, learn about their past experiences, expertise, and professional backgrounds.
Industry Reports and Market Research: in order to understand the market size/opportunity, trends, and competition landscape, reports from market research firms like Gartner, Forrester, or industry-specific reports can provide valuable insights on the market opportunity.
News Articles and Press Releases: typical updates on recent developments, partnerships, product launches, or significant milestones achieved by the company; Googling here is key,
Investor Presentations and Pitches (if available): these can provide deeper insights into the company's strategy, market positioning, and future plans.
Interviews on Founders or Advisers: speaking directly with the founders or advisers can provide valuable qualitative insights into the company, and its potential.
Pitchbook or Crunchbase: These platforms provide comprehensive details of startups, including funding history, key metrics, competition, and sometimes information about valuation. They can be particularly useful for gathering data such as metrics, past deals, valuation and competition data. Here a quick look of the Highlights in the profile of a company in PitchBook:
By leveraging these sources, you're effectively gathering the essential data to complete each section of the investment memo template. Remember, this analysis aligns with the initial stages of the VC funnel: deal sourcing and screening.
After this stage comes due diligence, where deeper investigations into the potential investment occur. This involves multiple meetings with the founders to gain a comprehensive understanding of the business and to conduct a thorough assessment of the startup's viability and scalability and where a VC sees if there is nothing strange in the company.
Stay tuned for our next episode, where we'll dive deeper into the full stages of the VC funnel. We'll explore how due diligence plays a pivotal role in shaping investment decisions, ensuring that only the most promising opportunities progress further in the journey toward portfolio inclusion and eventual exits.