Frequently Asked Questions

The Scorecard is a tool designed to help investors make more informed decisions when considering early-stage investments by providing a snapshot of a company's current situation. Developed by Spreds, it offers an objective score based on a defined set of key factors commonly identified in academic research as indicators of a young company's chances of success. These factors include market potential, management quality, financial health, and other key indicators that may influence a company's future performance.

 

The Scorecard is not a formal rating or a comprehensive due diligence analysis but serves as a high-level overview to objectively compare early-stage companies. By standardizing evaluation criteria, it allows investors to quickly assess opportunities and identify where companies excel or fall short. Certain elements may hold more significance for individual investors depending on their priorities, such as management experience, market strength, or financial health. The score highlights both strengths and areas for improvement, offering a flexible tool for aligning opportunities with your investment strategy.

 

While the Scorecard simplifies comparisons, it is not a pass/fail system and should not be the sole factor in investment decisions. A company with a lower overall score might excel in areas that matter most to you, whereas one with a higher score may have weaknesses in specific factors. We encourage investors to analyze each component of the score carefully and to complement it with their own research and due diligence, including evaluating market potential, competitive positioning, and management expertise.

 

By providing clarity and objectivity, the Scorecard helps investors prioritize and streamline their decision-making process while remaining just one part of the broader investment puzzle.


1. How is the Scorecard calculated?

The Scorecard is determined using a set of objective criteria based on the most relevant elements found in academic research and on a few additional elements that allow investors to assess the return potential on their investment. These elements are widely recognized as indicators of a young company’s chances of success. Each element is assigned a point value according to its relative importance (given to it in academic research), and companies are scored based on the presence and strength of these elements.

The Scorecard is not a guarantee of success; it reflects the company's current situation based on available data at the time of evaluation. The score may improve or decline as the company progresses, and we do not guarantee it will remain the same or improve over time.

The Scorecard is built on objective criteria, with points assigned according to their importance. Some elements may be present, others may not, and their degree of presence does not automatically predict success or failure. It is a statistical observation, and start-ups, in particular, are known to defy such statistics regularly.

 

Yes, the score can change over time depending on how a company evolves over time (adding new team members, having more sales…). The score is based on current information, which may evolve as a company grows, faces new challenges, or achieves milestones. Investors should keep in mind that the score is subject to change, and future performance may differ from the current situation. 

 

Furthermore, Spreds believes that the methodology to be used is also dependent on the stage of development the company finds itself in and we plan to compile an appropriate set of criteria for different stages of maturity over time.

 

Spreds uses the Scorecard in two key ways:

- To help investors make informed decisions: The Scorecard serves as a tool for providing investors with an objective snapshot of a company’s current situation, helping them compare opportunities and align investments with their strategies.

- To prioritize companies for Tax Shelter investors: Some investors who allocate funds annually to Tax Shelter opportunities ask us to highlight companies achieving a minimum score of 50 points. Companies that qualify under the Tax Shelter regime—whether as start-ups (30% or 45%) or scale-ups (25%)—and achieve this threshold are automatically presented to investors through the Tax Shelter Tracer.

It is important to note that achieving a score of 50 points reflects eligibility for tax benefits but does not guarantee investment success. Investors are still encouraged to carefully analyze each element of the Scorecard before making a decision. Additionally, if a company does not answer a particular question, it will receive zero points for that criterion.

 

5. How often is the Scorecard template updated?

The Scorecard is calculated each time the company raises funds through Spreds. For the future, Spreds considers updating the Scorecard at least once a year.

 

The Scorecard is made available to investors on the company profile page. You will also be able to see a breakdown of each individual element and how the Scorecards on each of those criteria.


7. Which academic research has been taken into account?

·       José Santisteban, National University of San Marcos and David Mauricio, National University of San Marcos. Systematic Literature Review of Critical Success Factors of Information Technology Startups. 2017. Academy of Entrepreneurship Journal Volume 23, Issue 2.