Founder Investment Rubric
Back founders you can learn from, help, and trust to persist
- Difficulty
- Moderate
- Time to result
- ~weeks to results
- Steps
- 7
- Confidence
- 96%
The rubric starts from the observation that an early startup’s product and model may pivot, while the founder remains the central constant. The investor first checks whether the founder understands the customer and market deeply enough to teach the investor something new. Second, the investor asks whether the problem is personally understandable and whether their experience, network, or judgment can add useful value. Third, they assess coachability, grit, resourcefulness, drive, and the ability to preserve a coherent vision through rejection and setbacks. Past adversity can reveal how the founder behaves under pressure. The method is a fit screen, not comprehensive due diligence: product evidence, market size, economics, integrity, legal exposure, and portfolio risk still require separate analysis.
Origin
Dan Martell developed this rubric across more than 100 startup investments, including companies that became multibillion-dollar businesses and others that failed completely.
Core principles
- 01The founder is more constant than the initial product
- 02Deep domain knowledge should teach the investor something
- 03Investor-problem fit affects the value an investor can add
- 04Coachable founders can adapt as the company changes
- 05Grit and resourcefulness matter when plans fail
How to run it
- 1
Check market understanding
Ask the founder to explain the customer, problem, market, and product evidence in enough depth to establish genuine expertise.
Pro tip Notice whether the founder provides insights you had not encountered before.
Watch out Confidence and jargon are not substitutes for customer knowledge.
- 2
Test the learning signal
Determine whether conversations with the founder consistently improve your understanding of the domain.
Pro tip Ask for a counterintuitive market truth and the evidence behind it.
Watch out Do not invest merely because the founder is charismatic.
- 3
Assess problem alignment
Decide whether you understand or have experienced the problem and whether it fits your investment interests.
Pro tip Acknowledge quickly when another investor is better suited to the domain.
Watch out Personal familiarity should not be mistaken for proof of a large market.
- 4
Identify your contribution
Specify the expertise, introductions, credibility, or strategic support you can realistically provide.
Pro tip Name concrete assistance rather than a vague promise to help.
Watch out Do not overestimate your available time or network.
- 5
Probe coachability
Offer a difficult question or alternative interpretation and observe whether the founder can engage thoughtfully without surrendering independent judgment.
Pro tip Look for curiosity and evidence-based adaptation.
Watch out Coachability does not mean automatic agreement with investors.
- 6
Investigate grit
Ask about the hardest experience the founder has endured, how they responded, and how it shaped their behavior.
Pro tip Seek specific actions and lessons rather than a polished adversity story.
Watch out Do not romanticize trauma or treat suffering as a prerequisite for investment.
- 7
Complete broader diligence
If the founder passes the fit screen, verify product, market, economics, integrity, legal risk, terms, and portfolio exposure.
Pro tip Record which claims require independent validation.
Watch out The founder rubric alone is insufficient for an investment decision.
In the wild
An investor meets a founder whose initial product is likely to change. The founder demonstrates unusual customer insight, works in a problem the investor understands, responds constructively to hard questions, and provides concrete examples of resourcefulness through prior setbacks.
→ The investor gains a founder-focused case for proceeding to full due diligence despite uncertainty about the initial product.
Common mistakes
Investing in the pitch alone
An attractive product story may collapse after a pivot if the founder lacks judgment, adaptability, or drive.
Entering an alien market
If the investor neither understands the problem nor can add value, another investor may be a better fit.
Equating coachability with obedience
Strong founders should process advice intelligently, not follow every investor suggestion without judgment.
Is it for you?
Best for
It is best for hands-on angel investors assessing early-stage companies where founder quality dominates limited operating data.
Not ideal for
It is not ideal as a complete institutional due-diligence process or as justification for ignoring market, legal, financial, and product risks.
From the transcript
“I'm always investing in the person because the person's the only constant if this thing wins or doesn't, that's the only constant in the business.”
“do I feel like this is a person that I could learn from?”
“Typically, I'll ask people, but what's the hardest thing you've ever gone through in your life, and how did that shape you?”
From the episode
How to Push Past Your Revenue Ceiling with Dan Martell
Dan Martell