To Those Who Seek to ‘Win’ as Venture Investors
Information is the basis for better judgment, especially in your chance for success relative to future performance. For investors, most if not all of what they assess in their decision making comes from the information they develop through sources that include company records, interviews, forecasts, etc.; every factor that potential investors assemble for selection purposes. However, it’s a beauty contest that goes little more than skin deep, mainly because most encounters are brief. So who amongst the warriors merits a thumbs up?
On second thought, let me suggest what you should stay away from- Start-ups, no matter the record of those seeking funding. There are several reasons for this: If they’re really first-rate, any deal you make revaluation and structure (unless you’ve got ‘secret source’ you can add to the venture) means you were the high bidder, or simply could not find an early-stage opportunity with what you thought was less risk/more upside than this particular start-up. If that’s the case then you definitely need TABS, because you’ll be inundated with ventures that far outweigh the option you’ve chosen- and like the guy with the pillow, “I’ll guarantee that!”.
A TABS Score is more apt to recognize the winners from the “also-rans” because TABS appreciates that the members of the team are more predictive of success than the adroitness of their fearless leader. Almost without exception, highly successful and noted business people, do not go on start-up Boards, even as Advisors, because of the numerous risk factors, both financial and reputation-wise. When you see them aboard as cheerleaders, one needs to place those companies on the “Contender List”; but only one of the many assessments that TABS makes in differentiating one’s investment decision.
Marshall Sterman is a member of the Board of Advisors for TABS Score — Diligence-as-a-Service platform. He can be reached at www.marshallsterman.com.