Our assessment of startup potential revolves around five key categories: price, market, team, performance, and differentiation. Users familiar with our proprietary ratings algorithm can evaluate an investment based on these individual subscores or the overall score assigned to a company.
In our recent analysis, we examined the averages for each of these subscores and overall scores, categorized by the type of product or service offered by a startup. Note that our data is segmented into early and growth-stage companies, and we’ve excluded debt deals from our analysis. Here are some noteworthy findings:
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Early-stage hardware / CPG companies had the highest average overall, team, and performance scores. This may be attributed to the swift revenue generation capabilities of hardware and consumer goods products, outpacing software companies, especially those engaged in business-to-business sales that typically involve longer sales cycles.
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Early-stage pharmaceutical companies scored the lowest on average across the price, market, and performance subscores. The challenges in navigating regulatory hurdles specific to pharmaceuticals often extend their monetization timelines. Nevertheless, their strategic advantage lies in offering innovative drugs or medical equipment, underscored by a notable differentiation subscore. This is further corroborated by the observation that growth-stage pharmaceutical companies achieved the highest average overall score.
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Pharmaceutical companies were notably underrepresented in both early and growth-stage categories, and outliers may have influenced the observed patterns.
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Software companies scored the highest on average for the market across both early and growth-stage companies.
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For both early and growth stage categories, service companies (think restaurants, breweries, etc.) scored the lowest in both team and differentiation.
