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Looking to shortlist the next Unicorn? Try this curation approach when assessing!

While risk of startup mortality is real, so is the potential to earn 10x returns on your investment. And the quality of curation plays a significant role in predicting returns on your early stage investments.

Why is curation important?

According to Kauffman foundation research, 56 percent of companies fail, giving their investors negative returns. For this reason, angels invest in portfolios of companies. Among the successful companies, 9 percent provide investors with returns of 10 times their investments, which compensates for failed investments. Additionally their research on angel investors in Asia, suggested that between 75 to 79 percent reported returns meeting or exceeding initial expectations. The study attributed the results to angels’ commitment to in-depth due diligence before investing and close monitoring of investee companies.

Evaluating business ideas with new technology, no track record and selective market evidence is a balance of science-and-art. A robust evaluation framework ensures that we lay emphasis on a holistic business evaluation while going deep in individual elements. Also, there are unique elements in evaluating early stage businesses that are different from evaluating more mature businesses for debt / equity investments.

Key elements of our curation framework are outlined below:

ShiftAltCap’s Curation Framework

1.Ecosystem and Timing

While products / services need to fulfil unmet needs and / or replace existing solutions with higher net value, it is important to note that success is significantly dependent on where the product fits into the bigger scheme. For consumer-facing businesses, this encompasses existing affinities, habits, technologies and aspirations. Imagine, for example, the relevance of Robinhood in the absence of smartphones and users’ comfort in completing online transactions. For business-facing products / services, this gets a little more complicated. Institutional decisioning is more likely to be influenced by more fundamental shifts e.g. policy / regulatory changes. Take for example, Healthcare. Across the world, there is a rise in healthcare spend but it’s now reaching unsustainable levels. The response includes an integration of datasets across healthcare providers, wearable tech and pharmaceutical companies to evaluate trends and outcomes and drive pointed interventions to draw innovative product design, increase member engagement and improve preventive care.

Equally important to Ecosystem, is the timing element of a new product / service. Startups need to balance addressing immediate user needs to find revenue and survive but they also need to have a future-facing product to ensure they are relevant as they scale over time. This implies a deeper understanding of how their product and the evolving ecosystem will shape the needs of tomorrow and evolving solutions.

ShiftAltCap curated business: B2B funding for working capital of SMEs SME lending has been perennially plagued with problems of being underserved due to higher risk, cost to serve and disaggregated demand. With the new emerging world order, SMEs are breaking new ground both in terms of market access as well as ability to serve. While traditional players such as Banks, NBFCs are not able to carry the mandate, alternate credit scoring and automated credit underwriting can mitigate lender risk.

Premised on the concept of trade flow financing using in house and external marketplace for large companies with long supply chains, the company aims to simplify global trade transactions for buyers, sellers and financiers. The platform organises the market by ensuring asset quality and transparency on the underlying data. Decision: Go ahead

2.Go-to-market and Ability to Pivot

Truly the raison d’etre of any business; this is the criteria where all the action eventually culminates. Its also one of the hardest criteria to pass muster with us. The action plans for businesses vary significantly and there is almost no certainty beyond a few basic principles. Equally important is for the company to be able to pivot to meet the customer needs if it discovers that navigating