Sharper Due Diligence of Founders before Investing

How do VC and investors perform Due Diligence of Founders?

Top VC funds/companies have different methods and strategies for assessing the founders. The evaluation is often a mix of observations, interviews, and traditional psychological tests. Some more advanced VCs work with organizational psychologists.

Why traditional psychological test lack precision?

Traditional psychological testing is mainly built upon personality questionnaires and logic tests. Capturing an individual’s subjective view of herself. And a small part of cognition testing the ability to solve one kind of problem in an unchanged environment. Research shows that traditional tests have a measurement precision of about 20 – 50%. Read the latest meta study on validity in personnel selection by Sackett, P. R., Zhang, C., Berry, C. M., & Lievens, F. (2021).

Improve your predictive power of individuals and teams.

Enhance your insights and predictive power by combining your current methods of evaluating founders with Cognitive Neuroscience. It gives a sharper, more precise base for insights into the due diligence process. It will give you a 30 % higher precision than with current assessments.

Cognitive Neuroscience is how the brain’s information processing generates thoughts, feelings, and a basis for decision-making.

This decides how people perform and function in specific tasks and environments. NeuroCognitive Performance tests has a precision of 70% – 90% in measuring cognitive capacity, according to multiple studies  over time. (MSU, Bird et al 2003, Williams et al 2005, Lemay et al 2010, Wechsler 2008)