VC Crafters (Break Into VC) reposted this
How VCs Assess Risk and Opportunity: The Ladder of Proof Framework... Investors often use a mental framework when evaluating startups - a set of predictors for risk and success that can be visualized as a "Ladder of Proof." (Coined By NFX Fund). The Ladder of Proof is dynamic and unique to each situation. While investors may prioritize different aspects, understanding this framework helps founders communicate effectively with potential investors, recruits, and media contacts. Core Principles of the Ladder: 1️⃣ Each rung represents a predictor of risk or success. 2️⃣ The further up the ladder a startup climbs, the more signals it’s sending to investors that it’s a sizable opportunity and a worthwhile investment. 3️⃣ Some rungs — like rapid growth, a great team, or paying customers — are more powerful than others. And hitting on those rungs (marked in red) can level a startup up to a place where I’m willing to overlook some of the lower rungs (for now). 4️⃣ Different VCs will emphasize different rungs. The key is to understand your audience — which VC you’re talking to — in order to determine whether you fit their preferences. 5️⃣ The rungs listed above are representative, not exhaustive. This is an ever-evolving list. For founders, the Ladder of Proof clarifies where their startup stands, what’s next, and how to communicate effectively with investors. It aligns efforts on risk reduction, opportunity validation, and building investor confidence. While vision and conviction matter, concrete progress up the Ladder of Proof is what attracts the right investors. This framework helps founders focus on impactful actions, track readiness for fundraising, and connect with investors aligned to their stage. Fundraising doesn’t have to be a guessing game—use the Ladder of Proof as a clear roadmap for growth and alignment. What's your thought on this? If you find this helpful - please like, comment & share so that it reaches founders. . #startups #vc #founders #investors #fundraising #framework #startuptips #startup #founder #investing #funding #investor