My friends at Angel Camp visited us today, and we discussed how to invest in startups. One of the best questions was how do you know if a tend is worth investing in or overhyped?
MY ANSWER: Don’t bet on the trend alone. You need to look deeper. You need to analyze what value the startup is creating for their customers. It’s not enough to be using a new technology like AI or blockchain.
The startup must be able to show you exactly how this technology gives them a competitive edge.
The CEO needs to explain what specific advantage is and why this is so important to the customer.
If the CEO can’t do this, don’t invest, even if the startup has an incredible technology and is riding a wave of hype.