As a startup founder, he used to work his ass off for almost 10 years to get to an exit.
He then became a multi-millionaire and started investing in other startups.
Successful entrepreneurs often expect that their business experience is enough to succeed as an angel investor or a VC. They begin spending money earned with sweat, blood, and tears on other people’s ideas.
When investing into a new one, my friend always thinks: this will be the big win.
Most likely, it won’t.
If you've been at the card table for 15 minutes and still don't know who the loser is, then the loser is you.
The same goes for investing.
Everybody knows that over 90% of startups fail.
Somebody has to pay for these. Someone’s losing money.
Most of the time, it’s the angel investor.
Angels invest in early-stage startups.
These startups don’t have much traction yet. You never know if this investment will bring you back anything at all. No data, no cash flow, not much to base your decision on.
Pure gamble.
Well, to be honest, it’s not that pure a gamble.
There are ways to tell a complete trash from a promising idea.
But to learn it you need experience, you need to invest in a hundred or so startups… and watch them fail.
We watched a thousand.
Most of them failed.
Some succeeded well beyond any expectations.
My methodology for business growth, Growth Tracking, is based upon this experience, good and bad.
Part of this methodology is the way we perform initial business diagnostics to access the startup chances of success, focus on it’s most important limitations, and form a strategy to achieve the most ambitious goals.
I have compiled a simple checklist based on this diagnostic process.
It will help you in your conversations with early-stage startups, whether you are deciding to invest or want to help them grow.
Simply reply to this email with a word “checklist”, and I will send you back a PDF.