Every investor has a startup evaluation checklist. 

Some have it in their heads, others have it on paper, spreadsheets or Notion.

They look at your entire company with different weights of importance - some dig more into the team and product, others into market, defensibility, GTM, etc. - depending on their thesis.

In this article I’m laying out the 10 core areas of your startup which investors evaluate.

Let’s dive in:

Everything starts here. Investors want proof you're solving a real, specific pain that a sizable group of customers will pay to make go away. OR proof that there’s a really hot opportunity which you want to capture.

In the best case you have a working MVP in real users' hands, plus signs that you ship fast and feed user feedback straight back into the product. To use a metaphore here, there’s a big debate if your product should feel like a “painkiller” or a “vitamin”. My take is it should be a painkiller people urgently need.

This is the ceiling on how big you can get. Investors want a market large enough (think $1B+ and growing) so capturing even a small slice makes you a big company. The sizing of the market is always preferred to be bottom-up (based on your business model), rather than pulling a giant top-down number off a report. They'll also want a sharp "why now" story: the shift in tech, regulation, or behavior that makes this the right moment to build.

Early on, investors are betting on you more than the product. VCs often say they are looking for founders obsessed by the problem, the customers and the product. This makes it easier to endure the rollercoaster ride. Complementary skills and relevant domain expertise come as a bonus. Full-time commitment is non-negotiable.

Simply put - how do you make money? Investors look for business models where growth becomes cheaper as the company gets bigger - this allows for exponential growth. Also note that new and untested or too complex business models could be a bit scary for VCs.

Investors want evidence you know how to reach customers and convert them. Sure, the first customers could come from founder-led sales, but how does that evolve? They'll look at which acquisition channels you've tested and whether you understand the economics behind them (CAC, LTV, sales cycle, churn).

Traction is the proof that everything is working. Investors look for evidence of real demand (signups, revenue, usage, retention, referrals, pilots) and early on they care more about the trend line than the absolute numbers. Even the small wins count if they're consistent and growing.

Investors want to know why you'll still be winning in five years. They'll expect you to know your competitors (saying you have none is an instant red flag) and to explain what makes you genuinely different beyond price and features. Even better if you can point to a real moat forming: proprietary data, network effects, brand, or technology that would take a rival years to copy.

Investors want to see you understand the money side of your business. That means a financial model (even a simple one) covering the next 18 to 24 months with assumptions you could explain. A clear answer on how much you're raising and what milestones you’ll be able to reach is a must. 

This part often gets ignored. Investors want a clean cap table (no dead-weight shareholders, founders still holding the majority), IP fully owned by the company, and contracts in place for founders, employees, and advisors. Messy legals or unresolved disputes are a red flag.

If you read back on those 10 areas, you’ll already feel that you have more confidence in some and less in others. And this is OK - the point is not being 100% on everything.

The point is to understand where you have red flags and missing pieces, so:
1. You can work on fixing them;
2. Investors don’t catch you off guard with surprise questions.

The above 10 areas are the exact 10 areas we cover as part of our Fundability Sprint. We dive deeper into each one of them with specific questions to help you see your company from the investor’s eyes and spot any red flags in advance.

That’s all for this week.

See you again on a Thursday soon.