Hello everyone, today let's talk about how venture capital evaluates a project. Put simply, it's how investors can take the pulse of a startup or growing business to see if it's worth the investment.
1.Look at the story and pick the team.
Business model: It's like watching a movie trailer to understand what the company sells, where the target customers are, how big the market is, and what the industry prospect is.
Knowing heroes is important in the source: inspect the company's core team to see if they are masters in the industry, whether they have successful practical experience, and whether they understand the doorway of the industry.
2.Explore needs and find advantages.
Whether the market demand is accurate: just like vegetable market research, to see what customers need, whether the company's products or services meet the needs of the public, and whether they can be accepted by more people in the future.
Who is the top student in the industry: Analyze what are the outstanding advantages of this company, such as leading technology, strong brand, strong user stickiness, good cost control, etc.
3.Turn over the old accounts and settle the new accounts.
Past financial transcripts: It's like checking a student's transcript to see how the company's historical financial data is, whether it makes money, whether it has a strong ability to repay debts, and whether the efficiency of daily operations is high.
Guess the future financial forecast: **The company's future revenue, cost, cash flow and profit are like looking at the weather forecast, and you should try to accurately predict the future "barometer".
4.Scientific and technological strength and intellectual property rights.
A big test of technology maturity: see if their main technology is reliable, whether it can really be applied, and whether it is at the forefront of the industry.
How many patent certificates: count how many patents, trademarks, copyrights, etc. the company has, which is equivalent to the "golden job" of the enterprise, which can protect itself from being robbed of business by competitors.
5.Consider a roadmap for the retreat.
Possibility of listing**: Think about whether the company is likely to be listed on the main board, the science and technology innovation board or be acquired by other large companies in the future, which is one of the main ways for investors to recoup their investment.
M&A opportunity insights: If there is an opportunity to be favored and acquired by large enterprises, this is also an important way for investors to exit smoothly.
6.The legal level goes through a sieve.
Legal review should be rigorous: check all the company's contracts and licenses to see if there are any lawsuits and disputes, and ensure that there are no legal holes on the investment road.
Compliance management must not be forgotten: see whether the company is in accordance with the laws and regulations of the country when doing business, and do not step on the red line.
7.Weigh the risks against the benefits.
Quantify risk: Just like estimating the probability of winning or losing before playing cards, look at the risk of the investment, including market volatility, credit risk, and so on.
Calculate the expected return: Combine all of the above information to calculate the expected return on investment, and then compare whether the return is worth the risk at all.
In conclusion, venture capital evaluation is a nuanced process that helps investors make the most informed choices by comprehensively understanding and evaluating investment projects from multiple perspectives.