March 8, 2021
In "Angel Investing Tips"
Propel(x) Evaluation Process: Frequent visitors to our platform and avid readers of our digest know that every week Propel(x) is bringing more exciting startups online are using cutting edge science and technology to build the next great businesses. However, behind each thrilling story are myriads of new concepts and a lot of new terminology, which can be overwhelming.
You don’t have to do this alone. We at Propel(x) have created an online evaluation process that helps angel investors effectively assess investment opportunities by tapping into the power of our investor, entrepreneur, and expert network. Last time I wrote about the “Ask a Question” feature as part of our evaluation infrastructure. Today’s blog will pick up where we left off and get into more detail around how questions get answered and where “Referring an Expert” comes in.
As I described last time, there are 3 phases in the Propel(x) evaluation process – the phase 1 “Ask a Question” period being the primary activity for investors like yourself. After investors submit questions, in phase 2 those questions are shared with respondents of different categories (i.e. startup management, their customers, scientific advisors, and third-party experts) to be answered. Phase 3 is when investors can review the responses.
Taking Advantage of a Powerful Network
Questions are only useful if they elicit informative answers and help evolve potential investors’ thinking. Using the same diagram from my “Ask a Question” blog, we see that startups play an important role in providing informative answers – or they ought to. Besides making their own management team available for Q&A, startups should be motivated to share their best (in other words–most glowing) customer contacts and scientific advisors. Today they do this as part of the onboarding process to list on Propel(x).
Putting Startups to Work
You may wonder, “How objective are the opinions of people who are trying to get me to invest?” Considering that they are the closest to the company, it’s extremely beneficial to get an “insider view.” They are the closest to the day-to-day, and if a startup has a multi-million dollar letter-of-intent from a Fortune 500 company, wouldn’t you like to hear what this customer has to say? Often, a leading industry player who happens to be a startup’s first customer will have a fairly accurate view of how big the market is and how fierce the competition may be. Why not take advantage of that point of view?
Getting an Outside Opinion
Moving onto opinions that are NOT affiliated with the startup–the expert vertex of our triangle. What’s unique about Propel(x)is the fact that we engage third-party experts to opine on each deal. We place particular emphasis on getting answers from unaffiliated industry & technology experts as the final piece in the three-way dialogue for the investors’ benefit. But how do we ensure the quality of the third-party voice, i.e., more like Quora and less like Yahoo! Answers?
Firstly, our team puts a lot of effort into identifying relevant industry & technology experts through our academic, professional, and personal networks, as well as partnerships with leading research institutions and incubators / accelerators. We also rely on you to, our angel investors, to help maintain quality. T will delve more into our “Refer an Expert” feature in the next blog.
The Wait Is Now Over
Today, as soon as an investor question is posed to management, the startup will be able to see it in their Propel(x) account and begin drafting an answer, including adding any supporting charts or documents they see fit. No answer is visible to investors in draft form, but often startups will finalize their answers much sooner than the start of phase 3. Remember, startups have an incentive to keep investor interested and build momentum. So read what they have to say as soon as they say it!
During both phase 1 and 2 of evaluation, investors can easily see which questions have already been answered. Simply go to the Evaluation Tab | Submitted Questions section. Click on the Question panel that has a NEW sticker (in the above screenshot, the Management questions panel)–this indicates an answer has been added within the last week.
Not all questions within a panel may be answered. Only questions with a submitted response already will have an Answered link below, clicking on it will reveal the response.
What Else Can You Do?
Besides staying on top of management responses, you can also play a more active role contributing to the evaluation process, whether through asking questions or referring an expert. In the next blog, I will delve further into our “Refer an Expert” feature and discuss how investors like yourself can help us build a community of quality third-party opinion leaders to aid in your angel investing efforts.