Methodology v2
The complete formula.
Published, not asserted.
Every weight, every benchmark, every penalty threshold is documented here. If you disagree with the model, argue with the math.
Master five-step formula
STEP 1 — Compute four independent dimension scores (each 0–100) F = Financial Viability T = Team & Founder Quality M = Market & Product-Market Fit O = Operations & Legal ReadinessSTEP 2 — Linear weighted base LinearScore = F·0.35 + T·0.32 + M·0.28 + O·0.05STEP 3 — Imbalance penalty (non-linear) if min(F,T,M,O) < 30 → penalty = (30 − min) × 0.5 else if min(F,T,M,O) < 50 → penalty = (50 − min) × 0.2STEP 4 — Hard floor penalties (capped at −45 total)STEP 5 — Stage adjustment + localisation FinalScore = clamp[5..98]( LinearScore − Imbalance − Floors − Consistency + StageAdj + Localisation )Dimension weights — evidence-based
| Dimension | Weight | Primary evidence | Key finding |
|---|---|---|---|
| Financial Viability | 35% | CB Insights / NASSCOM | 38% of Indian startups fail due to cash flow |
| Team & Founder Quality | 32% | Payne 2011 ACEF Scorecard, JSR 2024 | Scorecard Method assigns 30% to team |
| Market & PMF | 28% | CB Insights, NASSCOM 2025 | 35% fail due to poor product-market fit |
| Operations & Legal | 5% | NASSCOM 2022 | Operations is hygiene, not predictor — extremes via floors |
Citations: CB Insights Global Startup Failure Report; NASSCOM India Tech Startup Report 2024–2025; Payne, B. (2011) Scorecard Valuation Methodology, ACEF; JSR 2024.
Dimension 1 — Financial Viability (35%)
F = (CapRatio × 40) + (RunwayScore × 30) + (BurnEfficiency × 15) + RevenueBonus + GrowthBonusCapRatio = min(CapitalAvailable / CapitalRequired, 1.0)RunwayScore = min(MonthsRunway / SectorBenchmarkRunway, 1.0)BurnEfficiency = max(0, 1 − (MonthlyBurn / SectorMedianBurn) × 0.6)RevenueBonus = +10 if generating revenueGrowthBonus = +5 if MoM revenue growth > 20%Dimension 2 — Team & Founder Quality (32%)
T = ExpScore + CoFounderSignal + PriorExit + Completeness + EducationSignal − SkillGapPenaltyExpScore = min(FounderDomainYears / 15, 1.0) × 25CoFounderSignal: solo=+7 | 1+ co-founders=+15PriorExit = +15 if successful prior exitCompleteness = (TeamCompletenessRating / 10) × 20EducationSignal: tech=+5, business=+5 (max +10)SkillGapPenalty: none=0 | minor=−3 | moderate=−12 | major=−25Dimension 3 — Market & PMF (28%)
M = (TAM × 0.30) + (Comp × 0.25) + (Diff × 0.20) + CustVal + PMF + LTV_CAC_AdjTAM (Indian, ₹ Cr): ≥5,000 → 100 | 1,000–5,000 → 80 | 100–1,000 → 55 10–100 → 30 | <10 → 15Comp: blue ocean=100 | moderate=68 | high=38 | dominated=12Diff: (self 1–10 / 10) × 100CustVal: +15 if paying customers OR LOIsPMF: +10 if explicitly confirmedLTV:CAC: >3:1 → 0 | ~1:1 → 0 | <1:1 → −8 | unknown → −5Dimension 4 — Operations & Legal Readiness (5%)
O = (Reg × 0.40) + (Infra × 0.30) + GST + IP + LandPenalty + LegalPenaltyReg: none=100 | low=80 | medium (FSSAI/BIS)=55 | high (RBI/SEBI/CDSCO)=25Infra: (self 1–10) × 10GST: +10 if registeredIP: trademark=+5 | trade secret=+8 | patent=+12Land penalty (if not arranged): shop=−5 | warehouse=−15 | factory=−25Legal: minor=−5 | major=−20 (also triggers a hard floor)Hard floor penalties (cumulative, capped at −45)
| # | Trigger | Penalty | Severity |
|---|---|---|---|
| 1 | Capital available < 35% of required | Up to −21 | Critical |
| 2 | Runway < 6 months | −25 | Critical |
| 3 | Major legal / compliance issues | −30 | Critical |
| 4 | Dominated market + Differentiation < 4/10 | −22 | Critical |
| 5 | Critical skill gap + No prior exit | −20 | Critical |
| 6 | Growth stage + No customer validation | −18 | High |
| 7 | High-regulation sector + No GST | −12 | High |
Stage adjustment
| Stage | Adjustment |
|---|---|
| Idea | −5 |
| MVP | 0 |
| Revenue | +5 |
| Growth | +8 |
Localisation adjustment (Part 25)
LocalisationAdj = BurnNormalisation + TalentMarketAdj + StateSchemeBonusBurnNormalisationDelta: 0 to +3 pts (lean burn premium)TalentMarketAdj: 0 to −8 pts (skill-gap × local talent depth)StateSchemeBonus: +2 to +3 pts (state-specific startup policies)Total localisation: capped at ±8 pts.Always shown SEPARATELY in the score decomposition.Score-band verdicts
| Score | Verdict | Investor interpretation |
|---|---|---|
| 75–100 | Investment-ready | Top quartile for stage; runway, team, market aligned. |
| 58–74 | High potential — gaps to address | Strong fundamentals with 1–2 addressable weaknesses. |
| 40–57 | Needs significant rework | Multiple dimension gaps; structural improvement needed. |
| 5–39 | Not viable in current form | Fundamental viability gaps; pivot likely required. |
24-rule consistency checker
Every submission is validated against 24 rules before scoring begins. Arithmetic impossibilities block scoring. Statistical implausibilities trigger penalties. Stage contradictions auto-correct the stage. Opacity is penalised as a signal.
| Category | Checks | Action when triggered |
|---|---|---|
| Arithmetic impossibilities | 8 | Block — scoring cannot proceed until corrected |
| Statistical implausibilities | 8 | Penalty + opacity flag — score adjusted, flagged in report |
| Stage-claim contradictions | 8 | Auto-correct — stage downgraded, flagged |
| Total | 24 |
All benchmark sources reviewed annually: NASSCOM (Jan), SIDBI MSME Pulse (quarterly), Bain India (annual), Redseer (annual), NABARD (Apr), RBI Digital Payments (May), KPMG EdTech (annual), DPIIT (quarterly).