{"id":7449,"date":"2025-09-10T11:15:36","date_gmt":"2025-09-10T11:15:36","guid":{"rendered":"https:\/\/aomtodayprod.wpenginepowered.com\/?p=7449"},"modified":"2025-09-10T15:15:45","modified_gmt":"2025-09-10T15:15:45","slug":"three-questions-to-ask-yourself-before-investing-in-a-startup","status":"publish","type":"post","link":"https:\/\/www.aom.org\/today\/three-questions-to-ask-yourself-before-investing-in-a-startup\/","title":{"rendered":"Three Questions to Ask Yourself Before Investing in a Startup"},"content":{"rendered":"

By Nick Keppler<\/a><\/p>\n

For new or wannabe investors, and even for seasoned investment professionals, the world of tech startups can be overwhelming. Due diligence on such companies can be bogged down by buzzwords and steeped in mentions of new technologies and concepts that are still emerging. It can be difficult to determine who has harnessed a trend from who is merely riding one\u2014or pretending to do so.<\/p>\n

Academy of Management Scholar Marc Gruber<\/a> of the \u00c9cole Polytechnique F\u00e9d\u00e9rale de Lausanne has studied startups for more than 25 years. He has a few rules of thumb to consider before investing in a startup. The first may look obvious yet is frequently neglected by founders: The business has to meet an actual market need\u2014it should offer not just a \u201cnice-to-have\u201d or \u201cshould-have\u201d but a \u201cmust-have\u201d product for its customers.<\/p>\n

\u201cIs there really some offering that is seeing increased demand by customers?\u201d Gruber added.
\n\u201cIf so, that\u2019s a good signal, as there is a solid backbone for the business.\u201d<\/p>\n

Secondly, investors should also be able to understand the business\u2019s competitive advantage, that is, how it could deliver something better than both established businesses and other startups in its field.<\/p>\n

\u201cIs there something about that startup\u2019s offerings that makes it stand out, relative to the competition?\u201d Gruber said. \u201cOr is it just some kind of \u2018me too?\u2019<\/p>\n

\u201cImitations can be successful if they’re very cheap or cost effective,\u201d Gruber added, but a startup whose offerings are redundant can quickly be washed away in a fast-paced field\u2014\u201cand even those founders who believe they may have a competitive edge need to ask themselves if that advantage may erode due to advances in AI and faster R&D.\u201d<\/p>\n

Lastly, one should therefore look at the startup\u2019s innovation pipeline. Gruber said that a worthwhile startup should employ a team of people who have proven themselves to adapt quickly and remain agile in the face of market volatility, especially in a startup environment where a company\u2019s fortunes can change overnight.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Nick Keppler For new or wannabe investors, and even for seasoned investment professionals, the world of tech startups can be overwhelming. Due diligence on such companies can be bogged down by buzzwords and steeped in mentions of new technologies and concepts that are still emerging. It can be difficult to determine who has harnessed […]<\/p>\n","protected":false},"author":12,"featured_media":7451,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22,21,75,342],"tags":[],"sp_smart_badges":[],"ppma_author":[840],"class_list":["post-7449","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-entrepreneurship","category-innovation","category-investors","category-technology"],"acf":[],"yoast_head":"\nThree Questions to Ask Yourself Before Investing in a Startup - Academy of Management Today<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aom.org\/today\/three-questions-to-ask-yourself-before-investing-in-a-startup\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Nick Keppler\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/three-questions-to-ask-yourself-before-investing-in-a-startup\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/three-questions-to-ask-yourself-before-investing-in-a-startup\\\/\"},\"author\":{\"name\":\"Nick Keppler\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/#\\\/schema\\\/person\\\/1b8aff6a6e3f22d0d813c97e6aab7149\"},\"headline\":\"Three Questions to Ask Yourself Before Investing in a Startup\",\"datePublished\":\"2025-09-10T11:15:36+00:00\",\"dateModified\":\"2025-09-10T15:15:45+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/three-questions-to-ask-yourself-before-investing-in-a-startup\\\/\"},\"wordCount\":352,\"image\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/three-questions-to-ask-yourself-before-investing-in-a-startup\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.aom.org\\\/today\\\/wp-content\\\/uploads\\\/2025\\\/08\\\/8715315a-17dc-4529-b9b8-a95e1821e711.webp\",\"articleSection\":[\"ENTREPRENEURSHIP\",\"INNOVATION\",\"INVESTORS\",\"TECHNOLOGY\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/three-questions-to-ask-yourself-before-investing-in-a-startup\\\/\",\"url\":\"https:\\\/\\\/www.aom.org\\\/today\\\/three-questions-to-ask-yourself-before-investing-in-a-startup\\\/\",\"name\":\"Three Questions to Ask Yourself Before Investing in a Startup - 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Due diligence on such companies can be bogged down by buzzwords and steeped in mentions of new technologies and concepts that are still emerging. 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