The Greatest Job in Berlin Part 2: Our Evaluation framework

This post first appeared on Project A’s Insights blog

Part 2: Our Evaluation framework

In his previous blog post, our New Business Analyst Benjamin promised to explain our evaluation process in more detail. In this part, he will explain the evaluation framework he and his team use in more detail.

Here it is in a nutshell: We analyze and evaluate new business models and investment possibilities in those areas on the basis of an in-house evaluation framework. The evaluation process also includes due diligence activities such as financial modeling, market research, expert interviews, product testing, technical performance and scalability tests and deal flow management for our incubation and acceleration projects.

However, the actual process differs slightly between incubation and acceleration opportunities and does not mirror our complete due diligence process. Instead it is meant to serve as a tool to help us quickly analyze cases, compare them and then decide on next steps.

The following points will briefly explain our evaluation framework. In addition, we have created a Google Doc which you can copy and/or download for your private use. Feel free to comment below this article with feedback, input or suggestions.

Team and vision

We want to know who the founders are, what makes them especially qualified for that job and what their overall vision is for their company. What relevant experience did they gain in the past and why are they the right entrepreneurs to do what they (plan to) do?

Description of the idea / problem solved

We aim to understand what a company’s idea does and what problem they are solving. Ideally they should be able to break it down into one sentence.

Category / matching investment theme

What industry is the company tackling and what category (e.g. AdTech, e-commerce, SaaS, …) defines the startup / idea best? What Project A investment theme does the idea match and why?


As I already pointed out in an earlier blog post, at Project A we are very driven to solve actual problems. How does the idea solve the stated problem and what is the product vision statement? What is the company’s value proposition for their customer base?

Market size and potential

This takes a look at the market the idea/startup is directed towards. How big is it currently, how has it changed in the past years and how will it evolve in the future? How big is the TAM, SAM and SOM you’re aiming for? What are current trends and new technologies favoring the evolution of your market?


Who are the relevant customers? How can they be put into different segments in terms of demography, location, income, etc.? How many of them are there and what is the best way to reach them? How do they suffer from the problem and what would they pay for an easy and seamless solution?

USP and competitive advantage

Here we are concerned with the company’s Unique Selling Proposition towards the customer. Why would customers choose to buy the product/service instead of going with existing solutions? What makes it better? Why would (potential) competitors not be able to enter the market right away? Is there a proprietary technology involved or are there patents filed?

Existing competition and barriers to entry

Although we at Project A know that we are more than capable of successfully starting ventures despite existing competition this is still an important topic. It is always interesting to see what competitors do and why they aren’t already satisfying the market. What are existing barriers to entry for you but also for other competitors? How easily could competitors rebuild the product? How is the existing competition being handled?

Business model and economics

This is probably one of the most important topics. As I wrote earlier, we are not big fans of businesses that don’t show any attempt to monetize within the next 5 years. Here it is important to understand how the business model works. What different revenue streams are there and how sustainable are they? How much money has been spent or has to be spent for customer acquisition (Customer Acquisition Costs – CAC) and how much revenue will one customer contribute over his lifetime (Customer Lifetime Value – CLTV)? How long will it take for one customer to contribute profit? How will economies of scale work in favor of those metrics?

Financial modeling

As a data driven company we’re naturally focused on numbers and financials. We love to see clean and realistic estimations and financial models. It’s very important to understand what the applied assumptions are and what the projected revenues, margins and other expenses are. Andrew Chen recently published a good article tackling the most typical mistakes made when modeling growth. Of course we’re aware of the fact that assumptions can be wrong and are mainly based on guesstimates. Nevertheless it is important to see how much effort and research a founder team put into their assumptions and hence their financial model.

Traction and KPIs

We love momentum, as that’s something that can drive a company internally and externally. Hence it’s important to understand what the current traction looks like. Do customers like the product? How much is spent on customer acquisition? Is the product going viral through PR or referrals? What is the customer retention rate or how fast do customers churn? How perform cohorts compared to each other?

Deal structure

The deal structure is something we don’t normally discuss in the first meeting. However, it’s significance is often underestimated by founders. For a VC it is important to understand how long the team has been working on the product, how much money has already flowed into the company and who else has invested so far. This includes the current cap table and the equity owned by the operative founding team. For the upcoming investment it is furthermore necessary to understand what amount the team aims to raise, what valuation that target is based on and what that cash will be used for in the future.

Exit scenarios

Last but not least, we evaluate possible exit scenarios. As an exit-driven company it is important to understand potential exit channels to e.g. bigger corporates, competitors or the public through an IPO. Existing exit comparables (e.g. exits of companies in the same field) also help in determining a future roadmap and exit potential.

You may find the full Google doc here:

In part 3, I will give you some concrete examples from our portfolio, explaining how they fit in our evaluation framework and why we thus made the final decision to invest in them.

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