I’m not big on formulas, but here was a great quote that I read this week in an article about “desrisking buckets” by Brendan Baker. You can read the whole article here:
“Investors fund startups when their excitement outweighs their hesitation. Hesitation comes from perceived risk. And for a startup, we can group these risks into some buckets:”
- Team risk: can these people work together to build a huge business?
- Technical risk: can this be built in a reasonable timeframe and with reasonable resources?
- User risk: will people actually want to use this?
- Revenue risk: will people actually pay for this?
- Scale risk: will people use or pay for this in large numbers?
- Partner risk: will any required strategic or distribution partners come on board?
- Customer risk: will they be able to sell to important customers?
- Funding risk: will anybody else fund this (esp seed stage, for many investors)
These are the questions I think almost every investor is asking themselves while listening to a Pitch. Make sure you address these issues when Pitching your awesome idea.