H2 Ventures

Venture Capital Virtual Internship | Task 2

How to use this doc

1. This is an example piece of work
2. At the bottom of this spreadsheet there are different sheets with analysis & con
3. Follow the calculations in the cells to understand how we got to the result
4. Develop your own version of this analysis, changing factors

Please note, the purpose of this spreadsheet is to not make an investment, but instead to canvas inves
& place them into our database
https://www.insidesherpa.com/virtual-internships/landing/HkzdjFN4mabt7vRSx/Venture-Capital-Virtual-Internship
fferent sheets with analysis & context
and how we got to the result
anging factors

an investment, but instead to canvas investmment opportunities

enture-Capital-Virtual-Internship
Investment Selection Process
As background for improving the grading scale, consider the steps of the investment selection process to understand the
The biggest determinant of a startup’s value are the market forces of the industry & sector in which it plays, which include

Steps

Step 1: Require applicants to submit an expression of interest. This may include a business
strategy, proposal, and a short video of their ideas. The venture capitalist will conduct an
initial review of the proposal..

Step 2: Start-ups that progress to the next stage will be invited to an interview. This gives
the venture capitalist an opportunity to meet the entrepeneurs and their team. The venture
capitalist will ask questions to each of the team members to ascertain their who they are,
and what they can bring to them team.

Step 3: The VC will get together with their investment and co-founding team and review all
teams that have passed the interview stage.

Step 4: Teams will be invited to pitch their ideas to the investment committee.

Optional: Review of how the start-up intends to use the money.

n process to understand the key criteria for selecting startups to invest in.
which it plays, which include the balance (or imbalance) between demand and supply of money, the recency and size of recent exits, the w

Criteria

Is the market size and anticipated growth of market large enough for this start-up; review of the start-
ups fit in the industry to obtain information about competitors, entry barriers, the potential to exploit
substantial niches, product life cycles, distribution channels.

The team's ability to achieve business strategy/plan; the teams skills & backgrounds; ability to
articulate and express their ideas; viability of the market to estimate the start-ups potential; the
founding teams' composition and strengths; the company's competitive advantage.

How well the startup fits with the firm's investment criteria

Product differentiation; process differentiation; price point differentiation; niche differentiation; how
well does the start-up fit with the VC's underlying philosophy; has the start-up backed demonstrated
progression with solid metrics and data;

Will you invest in advertising? Will you hire new talent, either a top-flight executive or new sales
staff? Will you use the funds to acquire a small firm that provides something you need so you don’t
have to develop it in-house?
cency and size of recent exits, the willingness for an investor to pay a premium to get into a deal, and the level of desperation of the entrep
e level of desperation of the entrepreneur looking for money.
Key Criteria and Grading Scale
Now that you understand the investment selection process, you can come up with a list of key criteria for the investment
You will find below a list of criteria to be considered in the process, as well as a sample grading scale using a 5 point sys

Key Criteria

Competitors

Entry barriers

Existing funding

Fit with firm investment criteria

Historical revenue/financials

Market size/opportunity

MVP

Product differentiation

Quality of team/expertise of founders

Team connection to problem

Tech development

Grading Scale

Criteria
Tech Development
MVP
Market Opportunity
Team Connection to Problem
y criteria for the investment selection process and suggest a new grading scale to be used.
ng scale using a 5 point system.

Scale (5 point system)

2
1
1
1