EdTech

An agro-industrial company of fruit juices and cereals and would invest in the purchase of shares and bonds to diversify my portfolio due to market risk

Irrespective of the industry (or sector or theme), investors favor star-ups that :

• Make clear the passion, commitment, and integrity of the founders;
• Suggest that the market opportunity being addressed (and so the potential for the company) will grow;
• Demonstrate a well thought-out business plan and evidence early progress toward its accomplishment;
• Embody interesting technology or intellectual property;
• Are appropriately valued, with reasonable terms; and
• Offer the promise that additional rounds of startup funding can be raised if continuing progress is made.

Like Olivier Serrat says , make clear the passion of the founders.

E.g., what are the drivers and motivational factors behind the entrepreneurs? Here is some material behind the all 6th classic archetypes. (www.entrepreneurprofiletest.com) Entrepreneur profile test – Find out what motivates and drives you.

I personally think that startups addressing new energy, the climate crisis and the looming food crisis (the war in Ukraine exposed how fragile it is) would be growth areas of the future.

Whatever you choose, here are some questions you could ask:

General Overview

Getting a general overview of the business is an important first filter. It will help you get a feel for whether the business is something that you’d like to get involved in and whether it has the return potential (financial or social return) that you’re looking for.

· What does the company do?

· How far along are you? This relates to the business as a whole and would include feedback on the product, team and customers.

· What big customer problem does it solve? Is this a major pain point, is it popular, is it urgent?

· What's the business' vision, where is this journey going to take us?

· Where is it based? [It’s important for you to be close to an early-stage business. There are always fires that need to be put out or hurdles that must be overcome. Doing this over the phone or online is not always practical or possible.]

Market

A young business is always making its way into a market. By the time you chat to startups they’ll be talking about the market potential rather than their current share. Entrepreneurs are inherently optimistic and as a result may tend to overstate the size of the market. Apart from asking these questions, it’s important to also do your own research.

· Who is the customer? Often solutions differentiate between users and paying customers.

· How are these customers currently satisfying this need?

· How big is the market opportunity?

· What is the total addressable market (TAM)?

· What is the serviceable available market (SAM)?

· How quickly is this market growing?

· What percentage of the market do you plan to get over what period of time?

The questions listed above relate to top-down research. Bottom-up market sizing is often more time consuming but generally more accurate. This considers the number of distribution channels or partners and estimates of how much of your product can be sold by each partner. These estimates are usually based on an extrapolation of the existing sales funnel.

Team

This is the most important aspect of any startup. There are a few universal truths in life, one is that every startup will face challenges. It’s the team that will determine if and how the startup overcomes these challenges.

· Who are the founders and key team members?

· What relevant domain experience does the team have?

· Are you outsourcing any functions?

· Why is the team uniquely capable to execute the company’s business plan?

· What motivates the founders and how are they showing their commitment to the business? Do they own the equity or are there other shareholders?

· What other business interests do they have and are they sufficiently committed to the business?

· How do you plan to scale the team in the next 12 months?

Products and / or Services

Often getting a succinct description of the product or service is a challenge. Entrepreneurs tend to be extremely passionate about what they do – this is necessary because the odds are stacked against them. It also means they struggle to stop talking about what they do.

· Why do users care about your product or service?

· What are the major product milestones (past and future)?

· What are the key differentiating features of your product or service?

· Can you provide a demonstration of the product or service?

Competition

Understanding the landscape is imperative! You’ll often hear, ‘we don’t have competitors’. This is a poor response. Either the startup has not done enough research or they need to broaden their search – its important to remember that startups are solving a need (customer pain point). Perhaps they are solving the need in a different way to incumbents but they need to be aware of other companies solving the same need. If there is really no-one doing it there may be no market opportunity. Its rare that a startup is solving a new need, in a new market, with a new product.

· Who are the company’s competitors?

· What will give your company a competitive advantage?

· What advantages does your competition have over you?

· How do you compete with respect to price, features, and performance?

Marketing and Customer Acquisition

These questions will go a long way to helping you understand how your money will be spent. The cost of client acquisition should always be less than the customer lifetime value.

· How does the company market or plan to market its products or services?

· What is the customer acquisition strategy? Will any partners unlock a group of customers?

· What is the cost of a customer acquisition?

· What is the projected lifetime value of a customer?

· What is the typical sales cycle between initial customer contact and closing of a sale?

Progress in the Business

Matching up a startup with your investment preference should also involve the business stage. Investments could take place anywhere along the following spectrum:

Idea stage – Prototype – Complete Product – Signed Up Users – Paying Users – Profitable

The earlier you invest the lower the entry point, but the greater the risk and challenges. Proof of concept through early traction is not always necessary but provides an indication of where the solution could go. It goes a long way in mitigating market adoption risk - will customer part with money for the solution. Disciplined investors will stick the business stage they are comfortable with.

· Describe the business’ development to date?

· What early traction has the company had (sales, traffic to the company’s website, app downloads, etc., as relevant).

· How can the early traction be accelerated?

· What has been the principal reasons for the early traction?

· What are expected future milestones?

Risks

You’re not always going to get a complete answer to these questions, so important you consider them in conjunction with the rest of your due diligence process. Understanding the risks will help you develop strategies to mitigate them.

• What do you see as the principal risks to the business?

· What legal risks do you have? What legislation does the business need to be aware of?

· What licenses does the business require? What are the requirements to maintain this license?

· Are there any product liability risks?

Intellectual Property

IP can be a significant differentiator. A strong value proposition, as a result of IP, is often key to success in scalable solutions.

· What is the company’s secret sauce that differentiates you from the competition?

· What key intellectual property does the company have (patents, patents pending, copyrights, trade secrets, trademarks, domain names)?

· Who owns the IP? Would any prior employers of a team member have a potential claim to the company’s intellectual property?

· Will there be any claims by a party claiming to be a co-founder? (Note that this issue arose with Facebook and other companies.)

Financials

Financials are part of any due diligence. Early-stage companies may not have any track record to point to, but it’s important for the financials to tell a coherent story. The numbers will tell you the company’s current financial situation and proposed future burn rate.

· What are the company’s three-year projections?

· What are the key assumptions underlying your projections?

· How much equity and debt has the company raised; what is the capitalization structure?

· How much of a stock option pool is being set aside for employees?

· How much burn will occur until the company gets to profitability?

· What are the key metrics that the management team focuses on?

· What are future plans for raising equity or debt?

Financing Round

In closing, investors should get a full understanding of the funding round. An investor or investment syndicate can often take up a full round of funding, but this is not always the case.

· How much is being raised in this round?

· What is the company’s desired pre-money valuation?

· What is the planned use of proceeds from this round?

· What milestones will this round of financing help you achieve?

· How much runway will this round provide? When is the next funding round expected?

I will invest in the agricultural sector in which my main target areas will be rural schools. I will establish school garden and poultry farms. Open adult training and vocational center to help rural communities in their fight against poverty

I will fund start-up engaged in Integrated Farming to make villages self sustainable. There is a big scope in this segment.

It depends on the nature of the fund (whether focused on new technologies or focused on already established sectors) and the degree of risk assumed.

We are in a market of risk and uncertainty, because if you want to invest you need to carry out a good market study, or in any case carry out an evaluation of the diversified portfolios, adverse behavior.

Food production and processing startups are handy at the moment, however any investment goes with risks, hence the need to do a thorough market survey for any chosen business idea so as to keep potential risks at a manageable level.

If you have so much money to deploy and still be reasonable about how many ventures you can analyze and manage effectively within the given investment cycle, it would mean 20-25 target companies and, consequently, 40-50 M median tickets, including follow-ups. At the same time, if we speak of startups, it means round B the latest, so you need to focus on capital-intensive industries with high-growth potential. It means, most probably, metaverse, alternative energy, healthtech, agrifood and fintech, 4-5 companies from each sector.

Service organizations.

One should focus on Integrated Farming and Health care sector

I would try to find start-ups that are designing multi-faceted solutions and/or are including three-dimensional perspectives. Especially in emerging technology research and investment, I see an approach that is singular focused, i.e. solely based on artificial intelligence. However, these technologies are interdependent. Legacy frameworks, cybersecurity, and networking, just to name a few, could all play a part in AI deployment.

Plus, it just makes more sense to solve more than one problem at a time, if you can.