How to Assess Early-Stage Startups
Investing in early-stage startups can generate exceptional returns — but only when supported by the right knowledge, tools, and frameworks.
TheAngel’s tokenised structure enhances liquidity and transparency, but investors should still evaluate deals with discipline and clarity.
This section provides the investment education, frameworks, and tools needed to build and manage a high-performance early-stage portfolio through TheAngel.
7.1 Overview
These resources will help you:
Understand tokenised equity and how it differs from traditional angel investing
Assess startups with a proven framework
Build a diversified investment portfolio
Manage risk effectively
Use liquidity windows strategically
Optimise long-term returns
7.2 Understanding Tokenised Startup Equity
Tokenised equity is a modern upgrade to traditional angel investing.
Key Investor Benefits
Liquidity: Quarterly windows allow you to buy/sell tokens
Fractional Access: Invest smaller amounts in more deals
Transparency: Quarterly founder updates and clear financial structures
Security: Bankruptcy-remote compartments and institutional infrastructure
Standardisation: Identifiable via ISIN — recognised globally
What Tokenised Equity Represents
Tokens represent a beneficial economic interest in the equity held by the SPV or securitisation compartment.
This gives you rights to:
Value growth
Exit proceeds
Liquidity events
And avoids the administrative burden of entering each startup’s cap table.
7.3 How to Assess a Startup (Investor Framework)
Below is a structured system used by professional angel investors and early-stage funds.
TheAngel 6-P Evaluation Framework
1. Problem
Is the problem real and painful?
How often does it occur?
Who experiences the pain most intensely?
2. Product
Is the solution unique?
Is there early validation (users/revenue)?
Does the product demonstrate clear utility?
3. People
This is the most important factor at pre-seed.
Evaluate:
Founder grit
Industry knowledge
Track record
Coachability
Ability to attract talent
4. Progress
Even small signals matter:
MVP launched
Early customers
LOIs
Partnerships
Revenue traction
5. Pricing / Business Model
How does the startup make money?
Are margins attractive?
Is the pricing reasonable and scalable?
6. Potential
TAM (Total Addressable Market)
Timing (Why now?)
Competitive advantage
Long-term scalability
Scoring Method
Assign each P a score from 1–5.
Total score out of 30.
Example:
24–30 → Strong investment
19–23 → Good but needs validation
14–18 → High risk
<14 → Avoid
This creates consistency in your decision-making.
7.4 Red Flags to Watch For
Founder Red Flags
Blaming others for previous failures
Unrealistic projections
Poor communication
Lack of domain knowledge
High founder churn
Business Red Flags
Weak understanding of customers
No clear go-to-market plan
Overly complex technology
Legal/regulatory uncertainty
High burn with little traction
Tokenisation Red Flags
(Not on TheAngel, but in general markets)
No clarity on rights
Non-segmented assets
No valuation framework
Lack of regulatory alignment
TheAngel structure mitigates most of these risks by design.
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