VC Razor Due Diligence Framework

  • A. Product/Market Fit - In his now famous 2007 blog post, Marc Andreessen made a bold statement, which he credited as Rachleff's Corollary of
  • 1. Value Proposition - From Idea to Value Creation In the late 1800s, Ralph Waldo Emerson made a statement that evolved into the well-known
  • 2. Market Size - We’ve already talked about the market from the customer perspective, specifically their pain points being addressed. Our next investigation into
  • 3. Traction - Imagine a startup pitching on a Monday morning at our VC firm’s partner meeting (for some reason, all VC firms

  • B. Founder/Industry Fit - “Product/market fit” is a well-known and often used phrase among venture capitalists. It is also the place to start when
  • 4. Team - In his book The Startup Game, VC pioneer William H. Draper III asserts that one of the key ingredients for
  • 5. Secret Sauce - When VCs talk about a “secret sauce,” they are referring to a startup’s ability to do something that nobody else
  • 6. Business Model - Before we can have a coherent conversation about business models and startups, we need to talk a little bit about

  • C. Fund Fit - Up to this point in the book, we’ve been exploring the market and industry aspects of the value network. Now
  • 7. Growth Milestones - Perhaps the most important strategic concept for maximizing financial returns in a venture capital investment is milestones. Any time a
  • 8. Exit Strategy - As we’ve noted many times before, venture capitalists never make an investment without a vision of how to exit that investment.
  • 9. Return Analysis - VC Math 101 The two most fundamental terms in a venture capital term sheet are the pre-money valuation and the
  • More VC Math - Breaking down a deal. The book gives a case in which a VC firm is considering an investment in a
  • Return Analysis Worksheet - I recommend you watch the VCIC training videos first. Disclaimer: this is not written in stone. VCs are notoriously individualistic.
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