The Importance of Monitoring Startup Deals

Investing
by Hall Martin

Investors in startups need to monitor the candidate startup before investing so as to better understand the company and to see some consistent progress.

As an angel investor, I hear pitches every day.  It’s been a while since I heard a software pitch that WASN’T going to market in two months.  In fact, everyone is “going to market in two months,” but the reality is that most take one to two years to really get traction in a market.

When I find a potential investment that looks interesting, I put it on my watch list.  My father was a buy-and-hold value investor in publicly traded stocks.  He had a watch list of 10 stocks that he checked every month. He would look up their earnings, check for any management team changes, see what new products they were offering, and then he would look at the price.  After a period of time, sometimes a few months, sometimes a few years., he would decide to invest or not.  A no meant he took it off his watch list.  A yes meant he invested money and put it in his portfolio.

Startups are pretty much the same.  You can track them on their sales growth, team changes,  product development, and  in this case their fundraise.  As you receive reports you can start to build out a list of key traction points– leads, sales, channels, etc.  As one investor said, “I don’t invest in dots. I invest in lines.”  It’s important to build out a picture of how the business is growing.

By watching the deal over a period of time, you can better understand it and also hopefully see an upward trajectory at which point an investment makes sense.

,
Previous Post
Top Texas Seed Ventures from Q4 2016
Next Post
VC Profile: Fraser McCombs Capital

Related Posts

No Answer Means Zero

In funding, it’s important to answer the investor’s question. For example, when I ask a startup what their revenue is, I often get their story instead. That’s okay-I like stories. But when the story ends and there’s no indication of…

Top Texas Seed Ventures from Q4 2016

Top fundings for Q4 of 2016 were led by CognitiveScale, Medici Technologies, Phunware, Twyla, and Trendkite with the top ten fundings totaling $176M. Company Name Money Raised Announced On Date CognitiveScale $25,000,000 10/4/2016 Medici Technologies $24,000,000 11/28/2016 Phunware, Inc. $22,000,000…
rsz_security-protection-anti-virus-software-60504

How to Run an ICO-Cybersecurity Best Practices

Cybersecurity is now a key part of business operations across all industries, especially so for Initial Coin Offerings (ICOs).  It has become a concern for ICOs because of recent, high profile hacks – in particular the loss of approximately $40…
Menu