VC Memo on a YC company for Analyst Interview
I have come to the second to last stage of an interview for an analyst position at a VC firm. They gave me a rather open ended task of writing an investment memo for a company that just entered YCombinator. I found a general template (bessemer) for the memo however, how would I go about finding more information about their product and team (they only have a site and YC description). Ideally, for an investment memo like this, wouldn't I need a pitch deck? I can really only asses the product, teams credentials, and their potential market share compared to its competitors at the moment. If anyone knows what else I should be discussing, and what is required of me ( i don't have access to pitchbook), I would greatly appreciate.
Thanks guys
Early stage VC is all about product, market, and team. Team is the hardest to assess but see what you can figure out on paper / podcasts / interviews / YouTube. Market is about understanding GTM, market structure (e.g., seats * licenses, usage pricing, etc. type buying structures), market size, TAM, players in the space, differentiation, value proposition, all that jazz. Product should be a component of that but worth geeking out on the technology as lots of venture folks find that important (which, it is important, generally)
In my experience as a former founder & interacting with VCs (most of which by the way provide 0 strategic value despite their claims), team is by far the most important aspect at the earliest stages (e.g., YC 150k for 7% level type of investment). As an early stage team the product is likely to pivot a ton, so it's more about investing in founders that you believe will be successful.
Market is also important -> it's easy to validate if a problem exists, and it's easy to pivot the product but harder to pivot fundamental problems.
I agree. I know some people are more jockey focused and some are more horse focused. I think on a continuum of check-the-box-yes-or-no to driver-of-high-variability, I would put market farther to the left and founder farther to the right. But a Woz-quality founder in a small market still won't give you a venture backable exit.
Thanks a lot really helped me understand about team and market. I was able to figure out their competitors and have a strong sense of their product from docs to hopefully write about their potential to capture market share. I noticed that their site claims to have f500 companies as users but would i need empirical evidence of how many/who they to mention that in my memo? Pricing for their product is not disclosed publicly either. Sorry if these questions are rather elementary, i come from a background in academia/research in which qualitative assessments aren't that common.
For companies just try to figure out who the end user is - FS firms? CPG firms? Etc. and talk about TAM that way (might be a way to show you're not just going to give them some stupid people * price TAM that isn't very thoughtful). You also can just talk about the things you would want to validate even if that info isn't publicly available - I doubt these guys are expecting you to get non-public information. For pricing, try to find an old customer and call them up and ask. Just get creative with why you're asking - should be easy, check LinkedIn for users, their website for case studies, then just call 3-4 people and come up with a good story why you're asking.
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