How we do it: Managing dealflow with focus and consistency

In the months following the launch of TBD Angels, we have spent time laying the foundation for how the group will operate. These activities have ranged from tactical (ex: which tools & platforms we’ll use) to strategic (ex: how we’ll engage with our portfolio companies post-investment).

One area of attention has been establishing the set of topics to explore when we’re evaluating any company in our pipeline. Having a thoughtful evaluation process provides two main benefits for an investment group: focus and consistency.

• Maintaining focus in our engagements with founders is important to the TBD Angels team, given that we’re seeing a very healthy dealflow and must be able to quickly separate the wheat from the chaff by honing in on the important company attributes. Focus is even more important for founders as they are in a battle against time to build the team, ideate on a vision and evangelize the company. Raising money is a necessary evil that can distract from these critical activities. For this reason, TBD Angels aims to be quick with a “yes” or “no” and by establishing a focus in our screening process, we can deliver on that goal.
• Running a consistent process across our deal flow allows our group to evaluate one opportunity relative to others. Having a set of screening steps will ensure that we make our investment decisions armed with all of the important answers.

To establish focus and consistency, we use nine vantage points to review startups. The majority of the angles at which we evaluate opportunities are objective measurements, ones that can be quantified (ex: revenue goals, market size), are read-outs (ex: funding-to-date, team makeup) or are established plans (ex: product roadmap, business model).

• Opportunity/Market: What is the problem the company is solving? Is the market in dire need of a solution/when the solution is delivered, will the market not know how they lived without the solution? How big is the market in which the company is building its product?
• Product: What is the roadmap over the next 3–5 years? What is the business model?
• Go-to-Market: What is the headline of the press release of your first product? Who makes the purchasing decision?
• Team: Why is this the team to win? What is your strategy to build a world class engineering team?
• Risks: Why won’t you get swallowed up by Google, Amazon, Pfizer, etc? What happens if we have another pandemic?
• Funding: How much money have you raised to date? How much runway will the current round provide?

Equally, if not more, valuable characteristics required to properly evaluate an early-stage startup are subjective. Building, scaling and eventually successfully exiting a company is a marathon…sometimes one through the desert and without water. Do the founders have the grit to continue powering forward when the market changes, when a team member moves on, when a large customer churns? Does the entrepreneur approach all aspects of her role as CEO with a mission to deliver?

• Passion: Does the founder wake up and go to bed thinking about how his company will deliver on its mission?
• Informed: Does the team understand the business they’re building — the opportunities, the risks, the competitors and the customers?
• Preparation: Does the CEO spend time to understand your background or research the origin of TBD Angels? If she doesn’t do her homework for an investor pitch, will she prepare sufficiently for a sales meeting?

The most insightful results come from our conversations which draw subjective answers out of objective questions. By way of example, understanding the founder’s long-term product roadmap can allow for probing for how he may deal with evolving market dynamics, the birth of new competitors, and the scaling of the company.

These nine aspects used to evaluate the opportunities in our pipeline create a foundational focus and using this across our company screening steps creates consistency. Within these areas, our team will adjust course with questions relevant to the particular startup, so these are best described as a skeleton versus a strict instruction book.

By sprinkling these ingredients in our deal flow process, we aim to benefit both TBD Angels and the brilliant founders we are fortunate to meet.

Jason Burke is a member of TBD Angels