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Having recently networked with some VCs and currently in interview stages for VCs abroad, I am more aware of the framework behind VCs decision process.
Evaluation process
1. Background understanding
VCs usually have specialized niche sectors they are more invested in and have prior background understanding. They are more likely to invest in these areas and are up to date with latest developments are startups here.
2. Business Proposal(ideally given)
If it is the VC got approached, they likely have access to this document.
3. Self Research
VCs look out for promising startups and new kids on the block here and do their own backend research especially if they seem promising
4. Business Proposal(request if not given)
VCs can be the one to approach these startups for this. VCs can view their financial projections and fully evaluate their business model and strategy with this. Pre-emptive VCs can even draw up their own valuation and financial projections for the company.
5. Listen to founders pitch
Get pitched for funding and clear up any doubts and queries.
6. Bang out financial projections and eventual valuation
Can be done prior to Step 5 if VCs are quite committed to investing already.
7. Ultimate Decision Time
VCs will convene with Founders on another occassion to negotiate terms of investment including preventing excessive dilution, liquidation preference, board seats etc.
Bare in mind this is not a one size fits all industry structure and might vary across practices between startup cultures in diff countries.
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Speaking from the perspective of someone who has been in VC for around a decade, it makes sense to first start off with understanding a Venture Capitalist's objective: ROI.
Now with that in mind, let's look into the full spectrum of what the investment team does, to show the full process: