I stepped into a startup world in 2013 after an extensive career in corporations both in Finland and abroad. Involvement in numerous M&As, also cross-border, conducting company analyses and 7 years’ experience in the Board of Directors of a private equity company gave me tools, insights, and understanding to start to evaluate startups. The desire to grow fast, quick decision making, and close co-operation with customers have always inspired and motivated me, in addition to a willingness to share learnings. I have been personally involved with twenty-six startups so far in one or more roles.

Before starting to evaluate startups you have to decide upon a strategy: how much are you ready to invest in startups and to how many startups; what is your own investment criteria and what kind of an investor do you want to be; an active or passive investor, and a solo angel or a group investor. Syndication has developed a lot since I started investing in startups. It offers networks and more experience & expertise to succeed. 

When evaluating startups, I am trying to get answers to the following three key questions:

1.What is the business of a startup?

First you need to ask yourself, do I understand this business enough or do I have enough time to become familiar with it now? Thereafter

  • What is a business model and how are revenues generated? 
  • Do you see regulations or tariffs having an impact on this business now or in the future? 
  • Are you the right kind of investor for this start up? Who else is going to invest in this startup and why? 
  • Is there any (serial) entrepreneur to be expected on board? 

2.Are the team members entrepreneurs by mind and actions?

This is the most difficult but simultaneously the most critical issue when considering an investment in a startup. 

  • What is the founder’s (founders’) motivations? What do they want to achieve and when? What is the mission and vision for the future?
  • Is the founder (founders) an entrepreneur(s) by mind and actions?
  • Do entrepreneurs have previous experience as entrepreneurs or working for a startup?
  • Is the founder (founders) investing in a startup by themselves?                         
  • What about family and friends?
  • What are the values of the founder/founders? Values direct decision-making and give light to what is to come.

An entrepreneur is a multi-tasker and the list of required qualities is long: passion persistence, ambition, bravery, ability to stand for a pressure, proactiveness, good organizing, communications, marketing and human skills, flexibility, cultural sensitivity, a strong belief in their own doing, ability to keep focus on a ball also in hard times, has an understanding on what happens in the world, is not afraid of talking about the exit from day one. In addition, a founder (founders) must have a deep, proven knowledge of their own product/service and that of an intended business area, but also of what happens in the world more broadly. They must be alert to the competition and ready to act quickly if necessary.

You can give weights to different criteria and then count. Numbers tell you something but not the whole story. After you have numbers in front of you then the real work starts, logical reasoning and evaluation. Also, intuition has a role to play. I try to spend time with the candidates to get to know them in person. Future success depends on the potential of key people.

Science-based inventions are high on my list. Deep and broad knowledge – an apparent source for competitiveness – enables for example quick actions when needed. 

3.Is it worth investing in this startup?

The team and its members’ abilities, skills and capabilities are decisive.

In addition, I pay attention to the following issues when investigating a startup as an investment target:

  • the uniqueness of an invention 
  • existing and foreseeable market needs 
  • timing: it is crucial but only afterwards you know whether it was optimal!
  • competition, direct and indirect in particular
  • megatrends – are they supporting?
  • market size
  • scalability
  • Is the industry currently subject to regulation or is there any in sight?
  • Is the startup ready to put internationalization on the agenda from day one?

I do and recommend you do a thorough due diligence to uncover any surprises and fully understand opportunities, commercial potential, and risks. DD is a necessity, but it also offers a startup an opportunity to improve. 

Elements in a DD for a startup could be as follows: 

  • People, the most fundamental; background incl. legal, social, personal aspects
  • Product; scalability, IP protection, unit margins, production process
  • Market; target position in the market 
  • Financials; revenue growth, use of cash 
  • Equity structure; When equity was raised? What has the money been spent on?                         What are the terms for investors?
  • Risks

A remark: Carefully consider investing in a startup whose domain represents the hobby of significant co-investors. Increasing the value of the company may be less important than continuing the hobby with the support of other investors. The startup lacks the hunger to grow, and the exit remains a distant goal.

Dr. Ainomaija Haarla

Honorary Member of FiBAN

Dr. Ainomaija Haarla also discussed this topic at FiBAN Academy on March 11, 2025.

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