Creating and investing in startups is almost the same as giving birth to a child. Everything depends on who’s your partner and how well you’re informed about the process and consequences. Also, I completely disagree with an opinion popular with people who belong to our parents’ generation: one way or another, the child will grow up. In both cases, you invest your energy, money, health, and, most importantly, time. And while in the case with children you get a guarantee that a kid bearing your genes will be running in your house, which is definitely a benefit, a startup doesn’t give such a guarantee.

It happens that an experienced team with a talented CEO, a fantastic product, a bunch of clients before getting into the market, and $10 million investments goes into liquidation, while a 25-year-old with zero experience in business manages to grow a giant unicorn on VC investments in a couple of years. I know such examples (and you probably do too).

So what is the key to success, and what should be avoided? Of course, there’s no one-size-fits-all success formula, but there are some aspects to watch on either side of a startup — both for the CEO and the investor. Having 23 years of experience working with businesses, we can highlight some key points. Let me walk you through this journey from a startup’s and a VC investor’s perspectives. 

Let’s say you have a business idea, a service, a product, or a solution. You have some money of your own or angel investments to start. You have a technical vision, a strategic roadmap, and marketing and sales plans. At this stage, it’s crucial to allocate finances properly to use money, people, and time most effectively. Of course, you can rely on your own experience, feelings, and logic. However, if you get help from experts and dive deeper into technical architecture, structure, and objectives, your chances for success will multiply. 

In what ways can DeepInspire offer assistance at this point:

• carry out discovery workshops to move from abstract ideas to a clearer vision;
• develop an IT strategy and roadmap to visualize your company’s digital strategy by detailing each step;
• conduct technical audit and assessment to get a clear understanding of your IT environment’s current state and suggest improvements to unlock your growth potential.

This will allow you to move to the next round of investments painlessly and with minimum stress and pick the most appropriate investor. We’ll advise you about what to pay attention to when choosing your investor (toxic investors are a frequent reason for liquidation of quite successful projects), help you identify the product’s technical strengths and emphasize them when pitching to investors, optimize development costs and make the most out of available funds until the next investment round, as well as identify and mitigate potential risks and pitfalls. 

This is a brief explanation of how you can benefit from external experience in addition to your knowledge. But we are here for a perfect startup-investor match, so let’s explore the same route the other way round.

So, what does an investor need to know to make decisions about Series A, B, and other investments?

If you’re an investor and we’re taking a look at Series A, ideally, the startup team should provide you with all the necessary documentation and data. This will help you better understand the product/service, the project in general, its technical part, available resources, and CEO’s approach to the business at the earliest stage. You’ll get a clear picture of the investment matrix, growth steps, and which needs will arise at each stage. In other words, this is no longer taking shots in the dark — this is a fully conscious investment in a young business.

In the A stage, the business focuses on building the product. So the focus of technical due diligence will be on the potential.

Typically, we provide the following support at this stage:

• evaluate the technology from the business perspective;
• check if the company can deliver on the promises made;
• evaluate the product’s growth potential;
• assess team members’ expertise and capabilities, and the ability of technical leadership to scale when the product grows.

In case when the startup has been launched, and the team is showing results, as an investor, you can get involved in Series B. This situation is more straightforward — you can see the structure, established team, client base, and, possibly, profit. These benefits are accompanied by a large volume of documentation and data (which calls for a more thorough technical audit) and potential risks. Here, it’s imperative to strictly follow technical due diligence. This is a necessity that helps prepare the business for the investor, which is extremely useful for the business itself.

In the B or C stages, the business focuses on growing, and that’s when the investors are primarily interested in the product’s ability to scale. 

At this stage, our top experts conduct the following key checks:

• in-depth verification of technical solutions and their capacity to support current processes as well as serve the company’s business needs in the long run;
• checking if tech solutions and architecture can be scaled to the planned level after receiving investments;
• assessment of potential risks and pitfalls, etc.

Such an approach can go a long way toward minimizing risks, enhancing transparency from both sides, and increasing chances for successful collaboration and healthy communication, which undoubtedly affects the project’s growth.

Of course, even an impeccable technical part won’t secure 100% success because this is business. But with these practices, we’ll help you get closer to 100%.

I’m a fan of essentialism and hedonism, so here’s a quick tip: make your life easier and save your time and energy in every way available. Luckily, the time we live in provides us with a wealth of tools to make it possible. Instead of doing work you can delegate to someone else, take some me-time, spend it with your family, play with your dog, or indulge in a cup of coffee.

Peace and plenty of unicorns to everyone ✌🏻