In the era of rapid innovation, investing in startups can offer exceptional returns—but it’s also a landscape riddled with overvalued “hype” ventures. So how do experienced investors separate true potential from the noise?
1. Look at the Problem-Solution Fit
Startups solving real, painful problems in large markets tend to have staying power. Is the product a “vitamin” (nice to have) or a “painkiller” (must-have)? Prioritize the latter.
2. Check the Founding Team
Execution is everything. Look for teams with relevant experience, resilience, and a track record of building. Red flag: founders who talk more about raising capital than about customer traction.
3. Evaluate Traction and Metrics
Are there paying users? What’s the customer acquisition cost vs. lifetime value? Early-stage metrics like retention rate and month-over-month growth matter far more than press coverage or vanity partnerships.
4. Market Size & Timing
Even a great product can fail if the market is too small or adoption is premature. Analyze whether the startup’s addressable market is growing and whether regulatory trends (especially in Canada or the U.S.) might accelerate or block growth.
5. Ask About Exit Potential
Will the company eventually IPO, get acquired, or provide liquidity through tokenization? A great startup needs not only growth—but a clear path to investor return.