Early stage investors face 3 main risks when they assess a startup investment:
(a) Market. Can MONEY be made?
(b) Competition. Can they WIN?
(c) Execution. Can the FOUNDERS DELIVER?
While this list is a simplification (since researching markets or competitors is in itself a multi-staged process) and typically does not yield a binary yes/no answer, it actually summarizes the due diligence process well. Of the three points, (c) is the most complex and un-quantifiable. It requires talking with the team, researching their backgrounds, skills (both technical and soft), obtaining references, and even using some heuristics (such as doing the dishes or the hot tub tests). This third phase will take a lot of time and will require a lot of personal effort. However, parts (a) and (b) are all about information that can be researched with good tools.
We at Avogadro One are building a tool that will help make (a) and (b) as seamless as possible for investors, leaving them with more time to focus on the part where the human touch adds the most value. Most markets, business models and companies have been discussed and dissected online in one form or another - the main challenge here is getting this information in one place and analyzing how it fits together. Even assessing the team (part (c) in the above list) can be optimized with the right tools. As I mentioned before - we want to take the boring out of startup due diligence, leaving investors with more time and energy to make decisions.