Accelerators and incubators are used to conduct startup screening periodically. When they are ready to invest in a new cohort, they open their application form and receive tens of startup deals. Then they follow a structured screening process to end up with the best startups.
For angel investors, following a similar systematic approach is key to a healthy portfolio. Accelerators and incubators use this process to end up with astonishing startups. Let’s see the key benefits of startup screening, and how you can apply a screening process as an angel investor.
1. Risk Mitigation
Screening startups based on predefined steps helps in detecting red flags early. The screening process evaluates aspects such as team, business, product, and market. As an investor, you would never invest unless the tested aspects are in good shape.
Having a clear screening structure reduces the risk of unquestioned red flags. By making sure you cover all the critical aspects in the screening process, you avoid getting fooled by obvious startup failing traps.
2. Time Saving
Putting order to screening startups is a huge time saver. Looking for a new investment could be easier than going through long-text pitches and documents in inboxes.
A typical screening system starts by filtering out easily readable information about the startup. This could be the startups’ countries, industries, and brief descriptions; any data that the investor or analyst that the investor can base shortlisted/rejected decisions on quickly.
Only when the startups are shortlisted does the investor start screening longer documents and invite the startups for live pitches. This guarantees the investor goes through the evaluation process only with high-potential startups.
3. Access to Quality Deals
Accelerators and incubators receive high-quality deals mainly because they actively, or periodically, seek new investments. They do not wait for startups to email or DM them. Instead, they open their application and promote their investment programs.
By letting startups know you’re actively out there looking for new deals, you receive a higher volume of high-potential startups.
Adding to that, you never miss again on that opportunity that got lost in your inbox. Effective screening processes are there to help you screen all the interesting startups easily.
How to Make a Startup Screening System
As an angel investor, you can build your own startup screening system with us at VeFund. By signing up with us, you get a VeFund account with your domain (name.vefund.io). This account can be used to share your own custom-built application form and receive new startup deals.
We also offer the VeFund Survivability index, which is an AI screening tool to assist you with evaluating startups. Join us now and enhance your angel investing activities.