7 Ecosystem Data Points From Iratel Ventures
Deal flow, IV Score, extended team data and more
We are advocates of transparency and have been practicing this by regularly discussing or publishing our data.
We gather data in many ways. We try to quantify many aspects of our deal flow and due diligence process, even aspects that are not easily quantified. We do this through the startup evaluation tools we’ve built (IV Score and FundingBot) and comparisons with other ecosystems. We do all this so that we can be more helpful to the community and provide insight for them so they can build better teams, products and ultimately successful startups.
We also have a global network of investors and technology professionals with whom we regularly exchange ideas. This is based on our philosophy of Building Global Startups and supporting entrepreneurs wherever they are.
This data is a combination of results from our evaluations tools and what our team has used in the due diligence process. If you’d like to discuss specifics, leave a comment here or on our LinkedIn page or tweet us.
Let’s start by looking at the geographic dispersion of the deals we see and our network.
We want to achieve a good deal to network ratio so we can meaningfully connect experts to entrepreneurs. We’re looking to improve this especially in Iran and Canada. So if you’re reading this from either country and want to support entrepreneurship, we’d love to hear from you.
Now let’s take a closer look and see how these startups are being evaluated. Teams are the most important aspect of any startup. The majority of the startups we see are founded by ex-CEOs or product managers. Very few are straight out of university. Only 18% have a complete and experienced management team, this is an area that we need to work on.
From an opportunity point of view, naturally entrepreneurs are optimistic and nearly half estimate their market size to be above $500m. Ideally, there are cases that the entrepreneur doesn’t know what their market size is yet because they’re going to create it.
Interestingly, the strength of competition is evenly distributed between weak, modest and strong. Suffice to say that we do receive many deals with competing products and business models.
We always like to see product demos but occasionally see pre-product startups. Of those who have a product, the majority have a clear and focused view. On the other hand not many claim that they need patents to make their startup defensible and rely on the trade secrets and sheer volume of work that has gone into building a product to fend off competition. Only a minority plan to defend their IP through patents.
Our traction data shows a big dilemma. We have great teams building great products but when it gets to traction, many struggle. This is reflected in our data being evenly distributed between the different answers. We wish we had a magic wand that could give our startups instant traction. What we can help with is verifying the initial channels and provide a sounding board.
We call this following data point VC-Startup fit since we sometimes see deals that are too large or too small or we don’t feel there is a good match. However, the majority of the startups we see fall in the right range of raising between $250k and $750k and plan to reach breakeven within 36 months.
I don’t recommend taking this last data point at face value, but it shows there’s been a bit of change in the funding climate and the startup valuations we’re seeing. These are not transaction but only offer prices. It shows a healthy trend for IV Score.
If you’ve found this post intriguing, useful or even controversial, please recommend it or leave a comment here or on our LinkedIn page or tweet us.
This is the sixth in a series of posts about our investment criteria and ecosystem resources which was also posted on LinkedIn. We’d love to hear from teams with crazy (but commercial) startups. Get in touch or attend our breakfast series. Finally, don’t forget to get your IV Score or talk to our FundingBot to prepare for your next VC meeting.
Thanks to Max Khattak and Dr. Amir Saffari for their contribution.
