I've talked a lot over the last few months about the importance of doing thorough due diligence before making an investment.

This is especially true when you're part of a syndicate... because, let's face it: as an angel, you're often working with limited information. Founders and syndicate leads are both extremely incentivized to get you to invest, so while they're giving you a lot of great info, they're also likely presenting the company in the best possible light.

So what's an angel to do?

Meet Haley, an investor here at Hustle Fund who's a master at evaluating companies. Her secret? Relentless analysis.

When Haley first started investing, she set a goal for herself:

• evaluate 50 to 100 companies per week
• meet with 10 to 20 of those founders
• write one to two memos.

Haley wasn't trying to invest in all these companies. Her goal was to sharpen her ability to evaluate startups and better predict their ability to deliver a 100x return on her investment.

And today we're going to peek into one part of Haley's approach: evaluating the product.

The DIY Approach

One of the most critical parts to building a wildly successful startup is nailing the product. At the early stage – think seed and pre-seed – the first draft is pretty darn ugly. So we're not grading based on design aesthetic or even functionality at this point.

We're looking to understand if the company is generally heading in the right direction with the product such that their target customers:

a) feel that their huge problem is being addressed

b) love this product so much that they'll go through the pain of switching to a new solution.

Here's how Haley takes a stab at solving this mystery:

1. Become the Customer

First things first: sign up for an account and use the product. Pretend you're the target customer.

What works? What doesn't? What questions pop up as you navigate the platform?

This should give you invaluable insights into the user experience and help you understand the problem the startup is trying to solve.

2. Talk to Potential Customers

You read that right. You can actually get on the phone with the startup's target demographic and ask them some questions.

⭐️ The trick here is: don't lead with the startup's pitch. Instead, focus on understanding this person's world.

Here are some questions to ask:

• Walk me through a typical day in your work life.
• What tasks eat up most of your time?
• If you had a magic wand, what part of your job would you automate?
• How do you currently spend money on software?
• What would it take for you to switch to a new solution?
• What other systems would any new software need to integrate with?
• When you invest in new software, what kind of return are you looking for?

The key here is to be a detective, not a salesperson. You're gathering clues, not pitching a product.

3. Cast a Wide Net

The startup you're evaluating might be targeting accounting firms... but you may not know what kind or how large these firms should be. You don't want to interview an accountant at a huge firm, only to find out the target demographic is actually accountants at small firms.

Reach out to multiple potential customers across different types and sizes of companies to get a clear picture of the landscape.

What Are We Really Learning Here?

Next step is to look at all the pieces of intel you've gathered to see the full picture.

1. Is the pain real?

Is the startup addressing the #1 problem that it's potential customers are facing?

2. Can revenue grow?

The founders might have enough warm leads to earn early revenue. But will customers outside of that bubble pay meaningful dollars for this solution?

3. Is there PMF potential?

Does the product's philosophy align with what customers actually need? This is where your firsthand experience with the product meets the customer feedback you've gathered.

4. What roadblocks are up ahead?

Your conversations might reveal potential hurdles. Maybe there are integration requirements the startup hasn't considered, or ROI expectations are higher than anticipated.

5. Who are the other players?

What solutions are customers currently using? This gives you insight into the competitive landscape and helps you assess whether the startup has a truly unique value proposition.

A 360-degree view

Haley's approach will help you gain a 360-degree view of the startup's potential. By combining hands-on product testing with targeted customer research, you're able to see beyond the glossy pitch deck and enthusiastic investor memos.

If you go through this process, you won't just be evaluating a startup; you'll build a skill set that will serve you throughout your investing career. Each company you analyze, each customer you talk to, adds another layer to your understanding of what makes a successful startup, well, successful.

So, the next time you're faced with a potential investment opportunity, remember Haley's method. Wade in, get your hands dirty, and don't be afraid to ask some tough questions. Because this ugly first draft might be a unicorn one day.