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It depends completely on what stage the fund is investing in. The further up the chain you go the more financials matter but at pre-seed or even seed the financials are pretty useless beyond making sure the numbers work out in a best case scenario.
Thanks! That's helpful. Beyond the financials, what would be top 3 items to include and discuss extensively in a good IC memo?
Edit: I am looking at a early stage venture (series A)
This applies to all early stage ventures, but especially for Seed stage: 1) Communication & aptitude of founding team 2) TAM & SAM 3) Competitive Advantage of product/service/business mode. Also the above is assuming the idea itself has been thoroughly vetted for product-market fit. Product-market fit is absolutely critical, but it can be difficult to illustrate without sales.
Thank you for the reply! Based on your experience in IC meetings, what are the hardest types of questions to handle from the IC committee?
Look at the Sequoia IM for YouTube. You can find it online. Also, I believe Delian from Founders Fund wrote something about crafting good IMs on his website
I work for a VC that invests in companies ranging from seed to series B. The investment memo includes the following:
The Team Cap Table The Business
Product/Service The Market (Size & Competition) Proof of Business Model Growth Strategy Fit with our VC Business Model & Risks IRR & Valuation Calculations
You tend to focus more on the team and market early, and KPIs and financials later on.
x2 this except not just team and market; team, market, and product (you need to evaluate the latter, too, especially so early)
thank you for your reply! if you could recall, what are some of the harder/challenging questions from your IC committee?
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