Last time, I discussed why scoring is essential for startup evaluation—a practical guide to cut through the noise and identify high-potential opportunities. This week, I want to dive deeper into our scoring approach at Metis Ventures.
We experimented with different scoring methods to rank and differentiate startups and ultimately decided to automate them in an in-house tool, MetisX. By testing these mechanisms on a diverse set of startups that MetisX database offers, we pinpointed the elements that could be effectively automated, streamlining our evaluation process.
In this post, I want to share how we automated aspects of our scoring, without the need for subjective assessments or overly complex systems. Our automated scoring focuses on three key pillars: Founder, Team, and Company Relevance.
Founder Scoring
Early-stage investing hinges on founder potential. Extensive research on the topic shows a founder's influence can make or break a startup’s trajectory, so we begin by evaluating each founder individually.
Our founder scoring combines various quantifiable traits—such as prior entrepreneurial experience, educational background, and industry expertise—to form a structured evaluation of each founder. By assigning scores to founders based on measurable attributes, we gain a structured view of their capacity to navigate the challenges of a dynamic market.
Team Scoring
After individual founder assessments, we turn to the collective strength of the team. A cohesive team brings diverse skills and experiences, bridging gaps and working effectively toward a shared vision. In our team scoring model, we assess both individual talents and the team's collaborative dynamics.
Our evaluation focuses on factors such as shared experience, evidence of collaboration, and complementary skills. Certain objective data points—such as complementary skills or a history of working together—offer insights into the team's synergy. By scoring the team as a whole, we assess whether their combined capabilities can translate into success.
Company Relevance Scoring
One of the key insights we’ve developed over time is the Company Relevance Score. This score assesses how well a startup aligns with our specific investment thesis. This score actually came from the various databases we use. Many third-party databases offer scoring mechanisms, but these systems often operate as black boxes, leaving us unsure of the criteria or methodology used. This lack of transparency has led to missed opportunities or irrelevant recommendations on occasions. By implementing our own relevance scoring, we control and adapt the criteria to match our goals more closely.
Our Company Relevance Score considers factors such as market fit, alignment with our portfolio, and strategic synergies, allowing us to identify startups that are not only promising but also highly relevant to our focus areas.
In conlusion, scoring has transformed the way we approach startup evaluation at Metis Ventures. By breaking down our scoring into Founder, Team, and Company Relevance categories, we can sift through the noise and focus on startups with the highest potential.