Ask HN: How to assess an application for investing purposes?

#1

Post by calgaryo » Wed, Mar 10, 2010, 3:43 AM UTC

A friend of mine intends to invest in a SW company. He's asked me to review their flagship. I'll probably get a chance to look at a demo, and maybe a sneak peek at the code.

Anyone has similar experience or suggestions about what I should be focusing on? (Architecture, Maintainability, Security, Test Coverage, etc...)

Edit: spelling.

Re: Ask HN: How to assess an application for investing purposes?

#2

Post by jmount » Wed, Mar 10, 2010, 3:50 AM UTC

I would say the team and market need is more important than the code (since he is investing in the company, not outright buying the IP).

Re: Ask HN: How to assess an application for investing purposes?

#3

Post by skmurphy » Wed, Mar 10, 2010, 4:41 AM UTC

Do they have paying customers? Talk to them.

Do they have prospects evaluating it. Talk to them.

Can your friend supply expertise or connections in addition to money?

Re: Ask HN: How to assess an application for investing purposes?

#4

Post by jaddison » Wed, Mar 10, 2010, 6:01 AM UTC

Does the product solve a problem?

If so, what is the problem?

Does the problem exist for a large enough number of users?

Are those users likely to be paying users (or a sufficient percentage of them)? Or are there other relevant revenue models that exist - hopefully the company is aware of them?

The product isn't really the determination of whether the company is investment-worthy or not; it's whether the problem it is meant to address is inconvenient enough for users to WANT to get the product.