Our Partnership with GV: What It Means for Founders — Nov 2025
Our Early-Stage Diligence Framework
By Aryan Mehta · September 3, 2025 · 16 min read
Seed-stage investing is an exercise in making high-conviction decisions with minimal information. Unlike growth-stage investing, where financial models, cohort retention curves, and CAC/LTV ratios tell most of the story, seed investing requires building conviction from qualitative signals, pattern matching, and — ultimately — judgment about people.
Over the past five years at Latica Ventures, we have developed a diligence framework that helps us evaluate early-stage companies rigorously without falling into the trap of requiring the kind of data that only exists post-product-market-fit. This post shares the core elements of that framework.
The Foundation: Founder-First Evaluation
Before we evaluate any market or product, we spend significant time evaluating founders. Not because markets and products don't matter — they matter enormously — but because the market a seed-stage company is in at the time of investment is often not the market in which it achieves its biggest success. Product roadmaps change. GTM strategies evolve. The founders, their character, and their capabilities are the one constant.
We assess founders across four dimensions:
- Founder-market fit: Does this founder have an insight advantage in this market? Have they lived the problem? Do they have relationships that give them access to customers and talent that competitors cannot replicate?
- First principles thinking: Can the founder explain why their key assumptions are correct from first principles — not just by citing market research or industry consensus? Founders who can think from first principles are better equipped to navigate the inevitable pivots.
- Coachability without deference: We want founders who listen carefully and update their views in response to strong arguments — but who have the conviction to push back when they believe we are wrong. Pure deference is a red flag; so is rigid dismissal of feedback.
- Team-building instinct: How has the founder attracted their early team? What roles have they prioritized first? What compromises have they made, and which lines have they refused to cross in hiring? Early team composition is a powerful signal about founder judgment.
Market Evaluation: What We Actually Care About
We do not spend much time on TAM slides. Large TAM is a necessary but not sufficient condition for a great venture investment — and in our experience, the companies that succeed often look like small-market opportunities at the time of investment and reveal themselves to be large markets only in retrospect. We focus instead on:
Market Dynamics, Not Market Size
What is changing in this market that creates a window of opportunity? Regulatory shifts, infrastructure changes, generational behavior transitions, technology step-changes — these are the dynamics that create the conditions for category-defining companies. We want to understand why now is the right moment for this company to exist.
Structural Advantage, Not First-Mover Advantage
Being first is nice. Being structurally advantaged is the goal. We look for companies where success begets more success — through data accumulation, network effects, switching costs, or ecosystem lock-in. If a well-funded competitor could replicate the product in six months and immediately compete on equal terms, the business may not have the structural advantage required for venture-scale outcomes.
ICP Clarity
Can the founders articulate, with specificity, who their ideal customer is? Not "mid-market SaaS companies" — but the specific job title, company stage, pain trigger, and buying process of the first 20 customers. Founders with ICP clarity close faster and waste less time on deals that were never going to close.
Product & Traction Signals
At the seed stage, product and traction signals are typically early and noisy. We try to interpret them correctly rather than dismiss them.
The Wow Moment
Every great product has a "wow moment" — the first time a user experiences the core value proposition and their perception changes. Can the founders articulate what this moment is? Have we experienced it ourselves in a demo or trial? The absence of a clear wow moment is a significant product concern, regardless of what the metrics say.
Customer Obsession Signals
We talk to early customers. Not just to validate the founder's claims about traction — but to understand how customers think about the product. Do they describe it in the same terms the founders use? Have they referred the product to colleagues unprompted? Are they using it in ways the founders didn't anticipate?
Retention Over Acquisition
Many seed-stage companies can show impressive user acquisition numbers. We weight retention much more heavily. A product that users return to consistently — even if acquisition is slow — is almost always a better investment than a product with rapid acquisition and poor retention. Early retention problems rarely resolve themselves post-investment.
Financial Assessment at Seed
We do not expect seed-stage companies to have polished financial models. We do expect founders to have thought carefully about their unit economics — even if they are projections based on limited data.
Path to Unit Economics
We model the company's likely unit economics at scale, stress-test the key assumptions, and try to understand what needs to be true for the business to be sustainably profitable. This is not about accuracy — it is about whether founders understand the leverage points in their model and can articulate a credible path to healthy margins.
18-Month Runway Construction
We want to understand how founders are thinking about the use of the seed capital. Specifically: what milestones does this funding need to achieve? What are the key risks to those milestones? If progress is slower than expected in the first six months, what is the contingency plan?
Round Construction
Who else is in this round? Who are we co-investing with? At the seed stage, syndicate composition matters — not for validation purposes, but because complementary investors with different networks and capabilities add genuine value. We actively seek rounds where our co-investors bring something we don't have.
Reference and Background Checks
We conduct thorough reference checks — typically 8“12 references per investment, including both provided references and references we find through our own network. We also conduct background checks through a third-party provider on all founders. This is non-negotiable regardless of how strong the warm introduction is.
Reference checks at the seed stage have limited signal on business execution — there often isn't much track record to reference. What they reveal is character, work ethic, and how founders behave under stress. We place particular weight on references from people who have worked closely with the founders in difficult circumstances.
The Decision Process
Our investment decisions are made by partnership consensus. Any partner can bring a deal to the partnership; any general partner can veto an investment. This structure creates a high bar but also ensures that every investment has genuine conviction from the people who will be responsible for it.
We try to give founders a clear decision within three weeks of first meeting, and we telegraph our interest level honestly throughout the process. Founders should never have to guess where they stand with us — we think that ambiguity is disrespectful of their time.
Post-Decision: What We Do After Saying Yes
The diligence process does not end at term sheet. Between term sheet and close, we deepen our relationship with the founders, begin the board onboarding process, and connect portfolio companies to relevant resources. We believe the period between term sheet and first board meeting is one of the most important in the entire investor-founder relationship, and we invest in it accordingly.
Aryan Mehta
Partner, Latica Ventures. Former product manager and angel investor. Focuses on future-of-work and B2B SaaS investments. Writes about investment process and founder development.
