---
title: "How Do VCs Analyze Companies?"
description: "Learn how VCs analyze startups through proven frameworks. A data-driven approach to venture capital evaluation, from business models to value chain analysis."
categories: ["fundraising","startups"]
keywords: ["Theory Ventures","venture capital","startup analysis","business model generation","value chain analysis","Porter's Five Forces","market sizing","unit economics","Tomasz Tunguz"]
ai_summary: "Discover how VCs systematically analyze startups using structured frameworks for effective evaluation."
date: 2010-02-26
lastmod: 2026-07-31
canonical_url: https://www.tomtunguz.com/how-do-vcs-analyze-companies/
author: "Tomasz Tunguz"
---

One of the main challenges I have faced working in venture capital is to find a consistent structured way of analyzing companies. The main goals in this analysis are comprehensiveness of the analysis, ease of replication across sectors and like startups, developing a minimally viable analysis for a first pass that can also serve as the foundation of a deeper analysis as an opportunity warrants.

Over the past 18 months, I’ve read tens of business books on strategy, business models, and analytical frameworks. And over the weekend, I read one particularly insightful book that put a capstone on my preferred collection of analyses: [Business Model Generation](https://www.strategyzer.com/books/business-model-generation). The book is crowdsourced from a collection of over 1,000 authors and provides a flexible framework for brainstorming, analyzing and comparing business models. It’s an invaluable resource to any entrepreneur and VC.


As [Steven Blank](https://steveblank.com/2010/01/25/whats-a-startup-first-principles/) pointed out, the business model is the first principle that a business is based on and the framework and methods are the most lucid, approachable and actionable I’ve seen. As a result, I’ve updated my collection of analysis frameworks for each startup I review to be:

Business model diagram — my interpretation of the business model of a company in the same framework as the above book
Value chain analysis — to develop an understanding of the market dynamics and in particular margin and competition
Porter’s Five Forces — tends to be combined with the value chain; gives a good understanding of nature of long term competitive dynamics
Competitors and partners overview — helpful to have a landscape of the key players. Why partners you ask? They’re might be company’s next competitors
Market sizing — checkbox to ensure we can make our returns work given the investment contemplated
Unit economics — does the math work at a marginal customer level?
Key skills required by the business to skills possessed by the team — how much investment does the team need to make in h