Two Underwritings, Not One
A company can have genuinely impressive technology and still be a bad investment — burning cash faster than it can raise, selling into a market that's smaller than the pitch deck claims, or sitting on a cap table that makes future rounds unworkable. Technical evaluation tells us whether the technology is real. Financial evaluation tells us whether the business built around it can work. We do both, on every opportunity, before deciding whether to invest.
Revenue Quality and Growth Trajectory
Not all revenue is equal. We look past the topline number to how it's composed: recurring versus one-time, contracted versus pipeline, concentrated in a handful of accounts or broadly distributed. A smaller number built on durable, repeatable revenue is a better signal than a larger number that won't repeat next quarter.
Unit Economics
We look at gross margins, customer acquisition cost, and lifetime value together, not in isolation. A company can grow quickly and still be economically upside down if the cost of acquiring and serving each customer doesn't leave room for a viable business underneath the growth.
Burn Rate, Runway, and Capital Efficiency
How much cash is the company burning, how long does that give it before the next raise, and how much progress is that burn actually buying? We treat capital efficiency — progress per dollar spent — as seriously as the raw runway number.
Market Size and Competitive Positioning
TAM slides are easy to draw and hard to trust. We build our own view of realistic market size — who actually pays, how much, and how often — and weigh it against the competitive landscape and the company's actual pricing power within it.
Cap Table Structure and Round Terms
Prior round terms, existing investor rights, and accumulated dilution all affect whether a company's cap table can support the rounds it will need to get where it's going. A great company can still be a hard investment if the terms around it are already broken.
Customer Concentration and Retention
We look at how sticky the customer base actually is — churn, net revenue retention, and how much of the business depends on a small number of accounts that could walk away.
Where This Fits in Our Process
Financial evaluation runs alongside technical evaluation, not after it. A company only reaches an investment decision — and only gets brought to our investor network — once both sides of the diligence hold up.
Quant Labs View
What matters technically: whether the two evaluations — technical and financial — actually run in parallel and get cross-checked, or whether one quietly defers to the other when they conflict.
What we would test: whether a company's reported unit economics hold up under a churn or retention scenario worse than the one in the pitch, and whether the cap table can actually support the rounds it will still need.
What could invalidate the thesis: a company where the technology is genuinely differentiated but the business model can't capture the value it creates — a real failure mode this framework exists to catch.
Commercial implication: financial evaluation isn't a formality that follows a "yes" on the technology — it's an independent check, applied to every opportunity before an investment decision.