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Hunting for a Unicorn Hiding in a Paperstack – Screening Investor Decks

The first step for an angel investor in assessing a new investment opportunity is typically a review of the investor deck. The purpose of this review is to see whether the case is interesting. In other words, is the case a potentially good investment and is it a right kind of investment opportunity for me.

The Aim of the Review

Investors receive a lot of decks, and only a small fraction of those turn into actual investments. (For instance, with ReadyFireAim I invest in roughly 0.5% of all the companies I screen.) Thus, the process of reviewing the decks should be efficient in order to focus the efforts on most potential cases and minimize the time used in anything else.

In order to achieve this, I screen the deck first for green flags; items indicating that the case has potential and fits my investment strategy. I also look for indications of red flags, which – as one can guess – are things that tell me to stay away from the case.

Learning the A, B, C – How to Read the Decks

The contents of the deck may leave many of the questions unanswered. However, many elements in the deck give indirect information on these questions and how the case fits into the investment strategy. It is as important to read between the lines in the deck as it is to read the deck – or even more important.

The deck tells its reader a lot about the startup and the team: How they are able to present the problem and solution, how they approach the go-to-market, how they are building financials, how they are measuring their success, etc.

Green Flags – Why to Invest

I use four green flags in my assessment: Idea & market, team, traction, and exit opportunity. Ideally, the company should get four green flags in order to secure a meeting, but sometimes I am interested in meeting a company with three (or even two) green flags if the case is otherwise very interesting.

Idea & market

Behind every successful startup are a problem that is worth solving and a solution that is answering in that problem, typically in a unique way. There is no objective way of assessing the quality of the idea, so this is a more or less my subjective opinion. However, as I tend to focus on B2B startups, I usually try to position myself into the shoes of the potential customer: Would I pay for the solution to solve my problem. (This is why I stay out of B2C startups: I am not the one to predict the future consumer trends.) Scalability of the idea is also a crucial element in assessing the idea.

The market is more subjective to be analyzed: Questions like what is the size of the market, what is the competition and what are the purchasing habits in the market. Sometimes I get asked shouldn’t market idea and market be assessed separately. This is a good question and this was actually the way I first conducted screening (back then I used five green flags). But after I while I realized that if I liked the idea, I liked the market as well; after all, if the idea is good, the market is usually not the bottleneck limiting the growth of the startup.


Team = startup

The team is the most critical part of any startup. Thus, review of the team is the most critical part of the review. Obviously, one can only conduct a limited review of the team based solely on a deck. However, there are certain elements that can be assessed already based on the deck: What is the size and diversity of the team, what is their expertise in the field of their startup, how well they cover the key areas of building a growing business (vision, tech & product, sales, execution)?

This is, of course, relative to the stage of the firm: An early stage startup does not have a full team. But if the team has six members who are all M.Sc. focusing on product development, the team is unlikely to get a green flag from me as the sales and execution sides of the business are clearly overlooked.


Business = idea + traction

Typically I require startups showing at least some traction. Paying customers to validate that there is a market for the solution and that the team is capable of executing at least one sales model. This makes my job in assessing the case easier as I do not have to guestimate whether the solution is worth paying for. (For the question of ”What is enough traction?” the best answer I can give is ”It depends”, so please do not ask that question.)

Exit opportunity

I make my returns through the exit, so I need to see the exit route(s) from Day 1. And with exit route I do not mean an IPO, but that there is a market for this kind of venture by the time of the exit. Thus, it all boils down to the question how the market is likely to develop: If the market at the time of the exit is large and/or growing, it is likely that there are parties interested in buying into or expanding within that market. On the other hand, if the business is in a small niche market that is not likely to develop in the future, the exit opportunities are limited.

Exit opportunities are also limited if the startup does not have a long term competitive edge. For a potential acquirer, an option for the acquisition of the startup is to build the business from scratch or to acquire some other company. The better the competitive edge is the better the chances are for an acquisition.

Finally, while I prefer a quick exit, I need to be prepared for holding the investment even for 7 to 10 years; thus, the exit market needs to exist for the next 7 to 10 years. Therefore, even if the startup would be riding on the hottest thing of the moment, it is unlikely to get a green flag from if the future trend does not support it long enough.

Feelingstream won the funding program at Slush. After getting a lot of green flags will they be a unicorn? Photo: FiBAN / Wassim al-Nasser

Red Flags – Why to Stay Out

I use the deck also in trying to identify red flags as early as possible. As the red flags typically arise during due diligence, they are dealt with in more detail in a separate article.

While most of the red flags are such that can only be revealed by meeting the team or conducting due diligence, some can be spotted already from the deck. Easiest to spot is whether the case fits my investment scope or not. Also, valuation issues are easy to spot, as the deck usually includes valuation (and if it does not, it is an issue in itself). Other red flags that can potentially be identified from the deck are financial issues and cap table issues.


While there are certain aspects I look for in the decks, the process cannot be described as an exact science by any means. Many elements of the review are very subjective and the whole process is based on an investor deck (which is just one example of marketing material). But in the end there is only one question the investor should answer after the review: Do I want to hear more?

As I get hundreds of decks annually, it would be impossible for me to meet each team. Also, I prefer allocating more time on meeting teams and conducting due diligence on interesting cases compared to maximizing the number of startups I meet.

The aim of my screening process is to help in reaching this objective: I can effectively screen out other cases and focus on the most potential 5-10%. While I am likely to reject also great cases, this should leave me enough opportunities to find great ones to invest in.

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