The Power of Vetting: How a Rigorous Screening Process Can Improve Investor Returns

September 8, 2023
Peter Gbologe

The world of investing can be an exciting and rewarding one, but it is also fraught with risk. The challenge for investors is to identify the startups that have the potential to be successful while avoiding those that are unlikely to yield returns. While there is no foolproof method for identifying successful startups, a rigorous vetting process can significantly increase the likelihood of success. In this article, we will explore the power of vetting and how a rigorous screening process can improve investor returns.

Vetting is the process of evaluating a potential investment opportunity to determine its viability and potential for success. In the context of startup investing, vetting involves assessing the company's business model, financial projections, team, and market potential to determine its investment readiness, product-market fit (PMF), business model sustainability, and scalability potential. Vetting helps investors identify startups that have a high likelihood of success and avoid those that are unlikely to yield returns. By critically examining all the important aspects of vetting, investors can make informed decisions that tie into their investment goals.

Investing in startups is risky, as the failure rate for startups is high. According to a study by the Harvard Business Review, around 75% of venture-backed startups fail to return investors' capital. Due to the potential risks, it is important for investors to carefully evaluate startups before investing, rather than simply taking chances.

A rigorous vetting process can significantly reduce the risk of investing in startups. By evaluating a startup's business model, financial projections, team, and market potential, investors can identify startups that are more likely to succeed. Vetting can help identify potential issues, weaknesses, or challenges that may arise, and provide valuable insights into a startup's potential for success.

Pariti has perfected the vetting process, using an ML-powered predictive engine, which bench-marks current startups against 1.2K+ African startups from 2019 - 2022. This vetting process has an outcome that predicts the funding likelihood of a startup based on 100+ factors. Thus far, 8% of successfully reviewed and tracked startups had funding outcomes raising $197M after going through our vetting.

Why Gamble When You Could Use Grove To:

1. Access Pariti-Vetted Startups

Early access to quality startups is a key advantage that Grove offers to investors. By evaluating startups in their early stages and identifying those with high growth potential, Grove gives its investor community the opportunity to invest in these startups before they become widely known or sought after by other investors. This early access can give investors a significant advantage over their competitors, as they can potentially secure a larger stake in a successful startup and enjoy higher returns on their investment.

2. Save time

Vetting a startup is a time-consuming and resource-intensive process that involves researching and analyzing a range of factors to determine whether the startup is a viable investment opportunity. Grove streamlines this process by providing investors with access to startups that have already been thoroughly evaluated. This means that investors do not have to spend as much time researching and analyzing potential investments, which can free up their time to focus on other aspects of their investment portfolio.

For example, instead of spending hours conducting due diligence on a startup, an investor can simply review Grove's company analysis, which provides a comprehensive deep dive of the startup's potential. This can save investors a significant amount of time and effort, allowing them to quickly identify high-quality startups that are worth considering for investment.

3. Expertise insights

Behind Grove is a team of experts who specialize in evaluating startups. These experts have experience identifying successful startups and can provide investors with valuable insights. They can help investors understand the market potential of a startup, its competitive landscape, and its growth prospects. This can be especially valuable for investors who are new to the startup investing world and may not have the expertise to evaluate startups on their own.

Interested in accessing quality startups, saving time on due diligence, and gaining valuable insights from experts in the field? Join the Grove investors community today and gain access to a range of vetted startups with high growth potential. As a member of the community, you'll have the opportunity to invest in startups before they become widely known or sought after by other investors. Click here to join now and start building your investment portfolio with Grove.