Startup Analysis Inspired by Sequoia

For startups seeking investment or aiming to refine their business strategies, a structured approach to analysing various aspects of the company is essential. Sequoia Capital, one of the world’s leading venture capital firms, has inspired a set of questions that help entrepreneurs critically evaluate their businesses. Below is a comprehensive startup analysis template based on Sequoia’s guidelines.

Document Submission

Add any important document about your company you’d like to share
Provide essential documents such as your pitch deck, business plan, financial statements, or any files that offer deeper insights into your company. These documents will help in generating detailed answers to the subsequent questions.

Company Purpose

What is your company purpose?
Define your company in a single declarative sentence. This should succinctly capture what your business does and its core mission. For example: “We provide an AI-driven platform that simplifies project management for remote teams.”

Customer Pain Points

Describe the pain of the clients and how they solve it
Identify the main problem your target audience faces. Explain how customers currently address this issue, highlighting any shortcomings or inefficiencies in existing solutions. This sets the stage for demonstrating the need for your product.

Value Proposition

What is your value proposition?
Demonstrate how your product or service makes the customer’s life better. Explain the unique benefits and features that address the pain points identified. Provide specific use cases and show where your product fits into the customer’s workflow.

Market Evolution and Trends

How has your category evolved over time?
Outline the historical evolution of your industry or market category. Discuss recent trends, technological advancements, or regulatory changes that have made your solution possible or more relevant. This context helps investors understand the timing and opportunity.

Target Audience and Market Size

Who is your target audience?
Identify and profile the customers you serve. Include demographics, psychographics, and behavioral characteristics. Calculate the market size using:
Total Addressable Market (TAM): The total market demand for your product or service.
Serviceable Available Market (SAM): The segment of TAM targeted by your products or services within your geographical and resource constraints.
Serviceable Obtainable Market (SOM): The portion of SAM that you can realistically capture.

Competitive Landscape

Who are your main competitors?
List direct and indirect competitors. Provide an analysis of their strengths and weaknesses compared to your offering. Highlight your competitive advantages, such as superior technology, unique features, better pricing, or exceptional customer service.

Product Description and Roadmap

What is your product?
Describe your product line-up in detail, including:
Form Factor: Physical characteristics or interface.
Functionality and Features: Key functions and unique features that solve customer problems.
Architecture: Technical infrastructure or framework.
Intellectual Property: Patents, trademarks, or proprietary technology.
Add your development roadmap
Optionally, attach a file that outlines your product development timeline, including past achievements and future milestones. This shows your planning and commitment to growth.

Business Model

What is your business model?
Explain how your company generates revenue and makes a profit. Include information about:
Revenue Model: Subscription fees, licensing, advertising, etc.
Pricing Strategy: How you price your products or services.
Average Account Size/Lifetime Value: The typical revenue per customer and the expected duration of the customer relationship.
Sales and Distribution Model: Channels through which you sell your product (direct sales, online, partners).
Customer/Pipeline List: Highlight key customers and prospective clients in your sales pipeline.

Team Composition

Who are the members of the company’s team?
Introduce the founders and key management team members, detailing their roles, backgrounds, and expertise. Emphasize relevant experience that adds value to the company. Also, mention any notable members on your:
Board of Directors: Individuals who provide governance and strategic direction.
Board of Advisors: Experts who offer guidance and industry insights.

Financial Statements

Add your profit and loss statement
Provide your income statement to showcase revenues, expenses, and net income over a specific period. This helps in assessing profitability and operational efficiency.
Add your balance sheet
Include a balance sheet detailing your company’s assets, liabilities, and shareholders’ equity. It offers a snapshot of your financial health.
Add document with the cap table
Supply a capitalization table that outlines equity ownership stakes among shareholders, including founders, investors, and employees with stock options.
Add the document with information about cash flow
Provide a cash flow statement showing how cash moves in and out of your business. This is crucial for understanding liquidity and financial sustainability.

Utilizing This Template

Purpose and Vision

Clarify your mission: Defining your company purpose helps in aligning your team and communicating your vision to stakeholders.
Understand customer needs: By detailing customer pain points and current solutions, you can better tailor your product to meet market demands.

Market and Competitive Analysis

Market sizing: Calculating TAM, SAM, and SOM helps in understanding the potential for growth and setting realistic goals.
Competitive advantages: Identifying competitors and your unique value proposition is essential for positioning in the market.

Product Development

Roadmap planning: A clear product roadmap ensures that development efforts align with business objectives and customer needs.
Intellectual property management: Protecting your IP can provide a competitive edge and increase company valuation.

Business Operations

Revenue generation: A well-defined business model demonstrates how you plan to make money and sustain the business.
Financial health: Providing financial statements builds trust with investors by showing transparency and fiscal responsibility.

Team and Leadership

Highlighting expertise: Showcasing the team’s skills and experience reassures investors of your capability to execute the business plan.
Governance: A strong board can provide strategic direction and open doors to valuable networks.

Conclusion

This Sequoia-inspired startup analysis template serves as a comprehensive guide to evaluate and present your business effectively. By thoroughly addressing each section, you prepare yourself for discussions with investors, partners, and other stakeholders.