We talk to startups and investors, you get the value.
We talk to startups and investors, you get the value.
There is a great number of the startup valuation methodologies which prioritize the team of the project rather than financial indicators what usually takes place when assessing real businesses. It is so because early bird startups have to work in uncertainty and constant hypothesis testing. That is why investors suppose that in case a project has a strong team, they will manage to resolve all uncertainties or find the right solutions for further development of any of their hypotheses turn out to be a failure.
There are so many different criteria used in different approaches and methodologies for startups evaluation. But still, most investors are convinced in the necessity to meet all team members personally, to look in their eyes. And it makes sense as many investors do rely on their intuition and emotions in the cases when it seems impossible to count all the risks and alternative variants.
But crowd investing cannot rely solely on intuition as it is physically impossible for all potential backers of the project to meet the team in person.
Some more criteria for the quality assessment should be complied with. So these new methodologies should be:
approved by the expert community as the source of accurate, reliable, objective data about a startup;
accepted, understood, and credited by investors;
effectively used by experts with different backgrounds by means of the transparency of the technology, objectiveness, and unambiguity of the assessment.
Rocket DAO experts have already developed two alternative methodologies for startup teams evaluation. The first one focuses on the professional background of the key team members, whereas the second one is oriented at the psychological profiling.
The author of the first methodology Sergei Lavrinenko assumes that any startup team needs true specialists in the following fields in order to succeed in the market:
Business and marketing.
These three professional fields are the ones that really influence the project’s success.
The methodology requires to indicate the team members specializing in each of the fields specified above and their experience (the level of the previous company which a team member worked for: global, local and so on, the level of the position within the company). It is crucial to highlight the achievements approved by the field-specialists community — like winning in the relevant competitions, receiving nominations in the professional awards, publications in the peer-reviewed media and so on.
The author of the methodology proceeds on the assumption that all those achievements and professional backgrounds of the team members will give all the necessary competencies, connections and resources to the startup which directly influence its chances to become a new unicorn.
This evaluation is time-consuming for neither a startup nor an expert who actually carries out an audit of the project. A startup will have to provide information and the data confirming its credibility about the key specialist of the team. An expert will have to determine the level of the companies, positions, and achievements of each specialist.
The total score is calculated automatically.
The second methodology is much more complicated with regard to the practical realization. The author of the approach Vadim Soroka focuses on the evaluation and assessment of the factors influencing team success.
It is his understanding that success is the degree to which the team reaches the predetermined goals. So the author proposes the following formula:
A successful team =
a relevant leader +
a relevant working group +
good manageability of the working group +
high productivity of the team.
The author uses the following parameters for the productivity evaluation:
transparency of the management tasks and objectives;
a well-determined structure of relations and assignment of responsibilities;
availability of those specialists who will perform all the functions claimed to be executed;
evaluation of the labor input and of all deadlines;
The relevancy of the team leader is evaluated in accordance with his/her:
relationship building skills;
social and emotional intelligence;
roles performed within a team (according to Belbin team-roles theory);
In order to evaluate the relevancy of the working group one should assess the following parameters within the team:
availability of all team roles and specialists performing each of them;
motivation of the team members;
understanding of the role-playing position;
psychological combability of the colleagues;
satisfaction of the team members with the working conditions and their results;
distribution of the goods when reaches the predetermined goals and receiving profits from it, as well as in the case of failures and subsequent losses.
The following set of parameters help evaluate the degree of manageability of the team:
understanding and acceptance of the project’s goals by each team member;
the type of managerial connections;
All these parameters will be evaluated with the help of a series of online tests.
As one might notice the second approach isn’t based on the formalized evidence of the successful professional experience, but rather on the quality parameters, at the same time, focusing on the whole team dynamics rather than on individuals.
Each expert will use the methodology which attracts him/her the most from the professional point of view. Each opinion has the right to exist.
If you have your own methodology and approach to the team’s evaluation you are welcome to Rocket DAO to share this vision and develop a new methodology. But prior it is published you will have to defend it in front of the expert community. This will verify your expertise and turn into a new passive source of income.