As an investor, there are certain key factors that you look for when assessing a new startup. These factors, commonly known as the 5 T's, can help determine the potential success of a company and its ability to generate a return on investment.
Team - The team behind a startup is crucial to its success. Investors want to see a strong and capable team with a diverse set of skills and experience.
Technology - A startup's technology is the foundation upon which it is built. Investors want to see that the technology is innovative, scalable, and has a clear advantage over competitors.
Traction - Traction is a measure of a startup's growth and success. Investors want to see that the startup has gained significant traction, whether through customer acquisition, revenue growth, or other metrics.
Timing - Timing is key in the world of startups. Investors want to see that the startup is entering the market at the right time, with a product or service that meets a current or emerging need.
Total addressable market (TAM) - The total addressable market (TAM) is the potential size of the market for a startup's product or service. Investors want to see that the TAM is large enough to support the growth of the startup and generate a significant return on investment.
By considering these 5 T's, investors can assess the potential of a startup and make informed decisions about whether to invest. A startup that demonstrates a strong team, innovative technology, significant traction, good timing, and a large TAM is more likely to be successful and generate a profitable return on investment.
In addition to the above, I would add MOAT. A moat, like found around a castle but around your business can give you space to grow before any potential competition could get close to your business. This is often referred to as an economic Moat. What stops the competition being able to do what you do?
What other Frameworks do you know of when it comes to analysing a Start-up for success and investment?
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