Assess investment decision into a pre-seed company with rubric.

Driven by some level of optimism/faith. You may find something glaringly wrong at the beginning stages, but in the future you might be wrong. But some things may be really right. What happens if things go right??

Rubric: Team, problem, solution, market, and traction

Hustle Fund's Deal Assessment Scoring Guide.xlsx

Problem

Did they do their homework? Is this a real problem?

Hustle Fund's Take: We need this to be a real problem — a painkiller, not a vitamin.

Some questions to help assess Problem:

• Is this a vitamin or a pain killer? Vitamins are "nice to have.” This might be a feature to add to an existing solution, not a standalone business. Painkillers are “must haves.” They are solving a real problem that the customer is willing to spend money to solve.
• On a personal level, as the investor, is this a problem that you care about solving? Do you want to receive investor updates about this solution for the next 5+ years?
• What are people doing to solve this today? Are they stitching together 10 different things to make this happen?
  • Is this fragmented? Archaic? Opaque?
• Where on Maslow's “Hierarchy of Needs” is this problem? If it’s too high on the pyramid, it may be closer to a Vitamin than a Painkiller.
• How much customer discovery did the founder do to lead to the conclusion that this is a real problem?
• Based on the founder's research, what is the persona of the ideal customer to use the product/service?

Market

Swing hard into a LARGE market. Need to RETURN the fund because most will produce neutral or negative returns. The few that do break out need to pull up the ENTIRE value of the portfolio. Single deal needs to return the principal of the fund and then enter carry mode, which is the most lucrative part.

Angel investing is different - own money, so tripling or doubling is fine. So motivations are different from what a firm focuses on like philanthropic or personal interests.

So products with smaller markets focus may not be the best fit for an venture capital investment firm. Say you’re making a great lubricant for trumpets. That is not a billion dollar opportunity. But if the lubricant can also be used for heavy machinery or cars, then the market might be appropriate.