Glossary: Startup Sourcing, Screening and Due Diligence

Plain definitions for the terms investors, accelerators and programs use when they evaluate startups. Part of the Deckwise Playbook.

Startup screening

Startup screening is the process of filtering a large set of startup applications or deals down to a shortlist worth a closer look. It usually scores each company on the team, market, traction and fit, then ranks them so a committee can spend its time on the few that matter.

Deal flow

Deal flow is the stream of investment or program opportunities an investor or accelerator sees over a period. Strong deal flow means more and better candidates entering the top of the funnel. Managing deal flow means sourcing, tracking and qualifying those candidates without letting good ones slip through.

Due diligence

Due diligence is the deep investigation an investor runs before committing to a startup. It verifies the claims in the pitch, checks the financials, the cap table, the legal standing and the risks, and turns the findings into a memo the investment committee can act on.

Claim verification

Claim verification is the practice of checking each factual statement in a startup's deck against independent public sources. A claim about traction, market size, patents or funding is confirmed, qualified, contradicted, or marked unverifiable, instead of being taken at face value.

Pitch deck

A pitch deck is the short slide presentation a startup uses to raise money or apply to a program. It states the problem, the product, the market, the traction and the team. Because it is a sales document, its claims are the starting point for verification, not the conclusion.

TAM (Total Addressable Market)

TAM, or Total Addressable Market, is the total revenue opportunity if a product reached every possible customer. Decks often inflate TAM by counting an entire adjacent market. A grounded evaluation checks the TAM figure against analyst sources and the company's actual reachable segment.

Moat

A moat is a durable advantage that protects a company from competitors: proprietary technology, patents, network effects, switching costs, or a strong brand. Assessing a moat means separating a real, defensible edge from a feature a competitor could copy in a quarter.

Traction

Traction is measurable evidence that a startup is working: revenue, growth rate, active users, retention, or signed customers. Because early companies keep hard numbers private, traction is often read through indirect signals like hiring velocity, headcount growth and web traffic.

Red flag

A red flag is a signal serious enough to weigh against a deal on its own: a contradicted claim, a legal dispute, a governance problem, or a financial inconsistency. In a scored evaluation, a red flag pulls the overall score down so it cannot hide behind an otherwise strong average.

Investment thesis

An investment thesis is the explicit set of criteria that defines what an investor or program backs: stage, geography, sector, business model and values. A thesis turns "we know it when we see it" into a written standard a candidate can be measured against.

Anti-thesis

An anti-thesis is the explicit list of things an investor will not back, no matter how strong the company looks. Checking a candidate against the anti-thesis catches deals that score well on paper but cross a line the fund drew on purpose.

Thesis fit

Thesis fit is how well a specific startup matches an investor's stated thesis on stage, geography, sector and values. A company can be objectively strong and still be a poor thesis fit, which is why fit is scored separately from company quality.

Shortlist

A shortlist is the small, ranked set of candidates a committee will actually review after screening a larger pool. A defensible shortlist comes with the evidence and reasoning behind each ranking, so the choices can be justified to a committee or to LPs.

Investment memo

An investment memo is the written analysis that supports a fund's decision on a deal. It lays out the company, the market, the traction, the risks and the verified facts, and gives the committee a shared basis for the discussion.

Investment committee

An investment committee is the group that makes the final call on whether a fund or program backs a candidate. It reviews the shortlist and the memos, then decides. Good tooling makes the committee faster and its decisions more defensible, it does not replace the vote.

Scoring matrix

A scoring matrix is a structured grid that rates each candidate on a fixed set of criteria with defined weights, producing one comparable score. It replaces scattered opinions with a shared standard, so a stack of applications can be ranked on the same basis.

Evaluation framework

An evaluation framework is the defined method a program or fund uses to assess every candidate the same way: which questions get asked, how each is scored, and how the scores combine. A framework makes decisions consistent, comparable and explainable.

Accelerator

An accelerator is a fixed-term program that supports a cohort of startups with mentorship, resources and often capital, usually in exchange for equity. Accelerators receive far more applications than they accept, which makes screening at the top of the funnel a core operational problem.

Incubator

An incubator is a program that helps very early startups develop an idea into a company, often over a longer and more flexible period than an accelerator, and often without taking equity. Like accelerators, incubators must select from many applicants.

Unit economics

Unit economics are the direct revenues and costs tied to a single unit of a business, such as one customer or one order. They show whether a company makes or loses money on each unit before scale, and they are a core check on whether growth is healthy or subsidized.

Runway

Runway is the number of months a startup can keep operating before it runs out of cash, given its current burn rate. A short runway raises the stakes on the next raise and is a standard risk check in due diligence.

Sourcing

Sourcing is the active search for startups worth evaluating, before any of them apply. It means finding companies that match a thesis across the web and public data, rather than waiting for inbound deal flow. Sourcing feeds the top of the funnel that screening then filters.