∞Direct answer
Direct answer
Use a scorecard to test your thesis in a clear way. Set stop checks first. Then rate proof for market, team, customer, cash, and terms. A total score cannot clear a deal. Private deals can be risky, hard to sell, and short on facts. [1]
Set the job and the stop checks
An investment thesis says what your team wants to back. A scorecard turns that thesis into the same questions for each deal. Use it to choose the next work. Do not use it to predict a return.
Add stop checks before points. A stop check is a fact that needs a pass, a pause, or an answer. A high score must not hide a close portfolio conflict, a stage mismatch, or a key fact you cannot test.
Keep an unknown fact as unknown. Do not turn it into a zero or a guess. Give the gap an owner and a date.
- Mandate: stage, place, sector, and cheque range fit.
- Conflict: a close portfolio, buyer, or team link is known and reviewed.
- Access: the team can ask for the material facts it needs.
- Process: a named person can pause or pass the deal.
Rate proof, not the pitch
Use a small scale for every field. Give zero for a mismatch or no proof. Give one for partial proof. Give two for proof that the team can check. Put the source and check date next to each mark.
Keep the fields separate. A strong team does not prove demand. A large market does not prove a buyer will pay. A score is a way to see gaps. It is not a verdict.
The SBA says to test demand, size, rival options, and prices. It also says direct customer research can answer questions about one buyer. [2]
- Market: a defined buyer, need, alternatives, and price context.
- Customer: use, paid work, repeat use, or a test with a clear method.
- Team: relevant work, clear roles, and ability to deliver the next step.
- Money: cash position, burn, use of funds, and ownership facts.
- Terms and risk: security, rights, conflicts, key dependencies, and open checks.
Test the claims behind each mark
Ask what proves each claim. A market size slide may show a category. It does not show that a named buyer has the problem, budget, or reason to switch. Read the method, source date, and limits.
For company facts, ask for the source record. This may be a customer contract, bank record, share list, product log, or board note. Read enough to know what it can prove and what it cannot.
The SEC says investors should check financial facts, key people, rivals, cash use, sale limits, and loss risk. [1] Use these questions to guide checks. They do not replace them.
- Claim: write the exact statement being tested.
- Proof: link to the record, source, and date checked.
- Limit: name what the record cannot show.
- Next check: name the person, question, and due date.
Use the result to choose the next step
Do not set one pass mark for all deals. A deal with no sales needs different proof from a deal with sales. Agree decision rules before the meeting. Then write why a deal moved, paused, or passed.
Advance only when stop checks are clear and key claims have linked proof. Hold when a key gap has an owner and date. Pass when the deal misses the mandate, a conflict cannot be managed, or proof is too weak.
Keep terms outside the total score. NVCA model forms cover key venture deal papers. NVCA says they are a start only, need changes, and are not legal advice. [3] In a U.S. Rule 506(b) offer, sale limits apply and the issuer must file Form D after its first sale. Get local advice for the deal and place. [4]
- Decision: advance, hold, or pass.
- Reason: mandate fit, proof, risk, and unresolved gaps.
- Owner: the person who makes the next call.
- Record: review date, sources, changes, and open questions.
FAQ
Frequently asked questions
What does an investment thesis scorecard do?
It is a repeatable set of questions for an early deal review. It shows mandate fit, proof, risks, and gaps. It helps a team choose the next check. It does not predict a result.
Should a high total score mean yes?
No. A high total cannot clear a stop check. Keep conflicts, missing proof, legal terms, and major risks visible. A person should make the decision.
Can a scorecard assess a startup with no sales?
Yes, but change the proof. Look for a clear buyer problem, customer research, a test plan, team skill, cash facts, and terms. Do not give points for revenue that does not exist.
How often should we change the scorecard?
Review it after a group of deals or a material miss. Keep version notes. Change a field only when the team can say why it will make the next decision clearer.
REF
Sources
- 1
U.S. Securities and Exchange Commission, Investor.gov
Private Placements under Regulation D – Updated Investor Bulletin ↗ - 2
U.S. Small Business Administration
Market research and competitive analysis ↗ - 3
National Venture Capital Association
Model Legal Documents ↗ - 4
U.S. Securities and Exchange Commission
Private Placements - Rule 506(b) ↗