Identifying Future Value: How to Assess Early Stage Startup Investments

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Did you know that the United States has more startups than any other country in the world?

Even crazier, 90 percent of those startups will fail. This makes identifying future value in an early-stage startup difficult and complicates company valuation for investing in early-stage companies.

Thankfully, you’ve come to the right place to learn more about ways to assess early-stage startup investments properly. Continue reading to learn more.

Assess Founders of the Early Stage Startup

When you’re assessing something with a 90 percent failure rate, it is important to find founding employees that are dedicated and willing to work hard to make their vision become a reality.

Some key things that investors want to see from the founders are passion, team cohesion, and an ability to adapt. Some of the qualities that are considered the most valuable are:

  • Talent
  • Experience
  • Perseverance
  • Passion
  • Adaptability

These qualities will show that you and the founding members have the skills and know-how to get the job done. They will also show that you’ll persevere in taking your startup to new heights even if you have to pivot.

These are great things to display when trying to attract early-stage startup funding.

Return on Investment

The big thing that investors and venture capitalists will want to know is what they can expect to return on their investment into your startup. They will want you to address any concerns they have before they get into investment strategies.

The best investment strategy that you can take is not to oversell or overpromise. Focus on what you can do. Establish realistic and attainable goals and objectives for your startup.

They might use an industry multiplier to determine the fair market value of what your startup is worth when investing.

What Is Your Competitive Advantage?

Competition is usually a good thing, but investors will want to see what sets you apart or makes your startup able to efficiently and affordably address the needs of consumers.

The best way to get a feel for your competition is to analyze direct and indirect competition within your market. Use those companies to set goals and objectives for your own.

Does Your Startup Create Excitement?

Another thing that investors will want to know is whether your early-stage startup creates excitement in consumers. Investors don’t want to hear about potential. They want to see proof and results.

Be prepared to present your financial performance and other growth indicators to show proof of the excitement your company creates.

Have a Clear Mission

In recent years investors have focused on investing in startups that stand to make an impact socially. If you don’t have a clear mission, investors will potentially see your startup as directionless.

Make it clear to investors how your startup’s mission fuels your company’s culture and how it inspires your employees. Do your best to nurture a culture that keeps your employees engaged and excited to make your vision a reality.

Get Your Early Stage Startup Funding Today

Getting an early-stage startup off the ground is no easy task. Growing and building a company and a culture capable of bringing your vision into reality takes time, talent, and perseverance.

If you have a clear mission and a product or service that creates excitement in consumers, then you’re perfect for getting startup funding and providing a great return on investment.

Click here to start getting early-stage startup funding today and take your startup to the next level.