Methodology
To be successful in scaling a business or idea, you must arrange and exploit many points of leverage simultaneously.
Our scoring system attempts to tease out these points of leverage and reduce them to a simple scale, from 1-100. A Vscore above 70 indicates your company is employing leverage across many fronts and is ready to scale with venture dollars. The best tech-driven companies with excellent metrics will score above 85. Anything above 90 is exceptional. A high score does not guarantee success, but it can greatly improve your chances. Hard work and good fortune must do the rest. Read more for a framework of the Vscore system.
The S-1 Test
An S-1 is the SEC filing that all companies must submit prior to an IPO. This document details the business model, financials, market, executive team, and risks. VScore was developed with the S-1 in mind. Specifically, what metrics within an S-1 filing would get public investors most excited to buy shares?
We understand that companies don’t need to go public to be a success. But, favorable S-1 factors also indicate other positive outcomes, such as higher multiples on exit, excess cash flows to redeploy or distribute, and in general...more options.
Within that backdrop, the VScore questions fall into a few basic categories:
Market - is your market large and growing?
Product - is this a technology breakthrough, or a tech-enabled operating innovation?
Trajectory - are customers responding with an increasing share of dollars?
Market Leadership - could you be the top dog or is this a multi-player game?
Defensibility - are you aggregating an advantage?
Timing - why is now the right time to build this?
Competition - how crowded is the arena?
Strategy - are you saving customers money, providing ease, or offering status? Some or all?
Founder Fit & Never Quit - do you know this market well? Will you give up too early?
We carefully chose the phrasing for each of our 20 questions. Your responses are weighted to form a composite score. Each question is worth up to 5 points, within a range of 0-5 possible points. The weightings are proprietary, but developed from years of investing experience.
VScore is imperfect, but we believe it is directionally correct. In this game, that is the best you can hope for.
We are constantly taking feedback to evaluate and improve our scoring system. To provide suggestions, please email: hello@vscore.co
Founders can choose to post their VScore to our monthly leaderboard, which highlights innovative companies that have the potential for massive growth. You are free to submit your VScore anonymously, and we will provide a double-opt-in introduction to top investors upon request.
You can share your VScore on social media directly from the results email. You will receive an email detailing the strong and “less strong” areas of your score.