I had a learning breakfast the other day with a local venture capitalist. I was seeking advise on how he evaluates potential portfolio companies. The main take aways were:
1. Determine what the real revenue potential of the company can be
2. Can the business grow at 50 - 100 % per year for the first 3 + years?
3. What is the quality of the management team?
- Are they talented and do they have experience in the areas that the business requires
- Can they expand and implement the sales and marketing plan
- Do they have the technical expertise or access to the expertise to address technical issues regarding the product / service
4. Who are their first customers?
- Will they buy
- Why will they buy? Why will they buy from you?
- How can you get them to buy?
- Do they have the money to buy?
This is certainly not a complete list but it is a good start.