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Keep away from Excessive-Priced Startup Offers
Within the final week, I’ve been invited to spend money on two scorching offers on AngelList.
Each firms are doing effectively due to adjustments attributable to COVID-19. One is in telehealth. The opposite is in meals supply.
However after I checked the valuation on these offers, I used to be shocked. They had been costly. Each had extraordinarily excessive valuations based mostly on their present traction.
It’s clear that these startups have promise. However I made a decision to not spend money on both of them. They’re simply too unproven for the value they’re asking.
On high of that, there may be going to be an unimaginable quantity of competitors in newly scorching areas like telehealth and meals supply. Meals supply is an particularly powerful market to become profitable in. So far as I do know, there are solely a handful of worthwhile firms within the area.
I imagine the long-term case for telehealth is extraordinarily robust. And I’m on the lookout for promising offers on this space. However I’m not going to overpay by 2x to 3x to get entry to a pre-revenue startup. I like to recommend protecting your requirements excessive, irrespective of how “scorching” the sector is.
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