An excellent dive into the mind of an angel investor, and how he perceives and analyses deals:
There are just 3 inviolate areas for any investment: 1) A large, addressable market; 2) a capital efficient business model which can create good margins; and 3) great people. The first two I don’t even have to consider carefully—you can normally disqualify a deal that doesn’t cut it in less than a 2 minutes. But most everything else takes some time. My rough weights are as follows:
10% Product: (with at least a beta product up and testable)
60% People: Who is the team? (Past experience, past SUCCESSFUL experience, technical chops, hunger, humility, coachability, advisory boards) Do I believe the CEO? Do I like them?
10% Distribution: Who’s leading sales? Can they sell at the Startup (as opposed to Big Industry Leader) level? How will they reach customers? Also pricing, sales cycle, staffing requirements, etc.
5% Operations: Is this scalable? Tested technology? Dependable outsourced vendors?
5% Social proof: Who else is investing, and do they bring anything besides money?
5% Price and Terms
5% Everything Else
Worth a careful read if you're thinking of raising money.
If you read this far, you should follow my RSS feed here.