The company’s website has a list of customers? Check if they are indeed customers. The company may boast logos of companies that:

• were never clients (payers) because they were only testing the solution, or
• have used the solution in the past, but abandoned it rather quickly (for various reasons it did not meet their expectations).

The reasons for this can be various, such as:

• lack of knowledge about the service/product being sold (unknowingly misleading potential customers/users),
• promising customers capabilities/functionality that the service/product doesn’t have (and will not have any time soon),
• the desire to get a bonus from sales (at all costs) and demonstrate the results of their work (salespeople),
• delivering cyclical results to the investor in the form of new customers (startup management).

When analyzing apps (available in stores on Google Play and App Store), it’s worthwhile to analyze periodically (e.g. once a quarter):

• number of downloads,
• rating,
• user reviews.

Rapid increases in these indicators may indicate paid campaigns (organic traffic usually generates slow growth).

Performing such analysis periodically may reveal patterns that indicate paid advertising campaigns (after the budget is exhausted, the increases return to the pre-campaign values). Paid traffic (advertisements) may be characterized by low (or even zero) monetization.

As with the apps, periodically analyze other data (such as the number of users) available on the company’s website. Keep in mind that this data can be entered statically (it is not a cyclical query to the database).

Remember, however, that the number of accounts created is the number of accounts created. Overinterpreting this information may mislead you. Any percentage counting on this basis of the number of customers (payers) may be deceptive (as, for example, most of these accounts may be abandoned in the first 1-3 days after registration).

When analyzing the financial side of the competition, pay attention to:

• monetization models (e.g. subscriptions, extra-paid services, in-app purchases, ads),
• pricing and promotions.

For startups, the main (or even the only) source of funding may be an investor. So cutting off funding would result in the immediate bankruptcy of such a startup. So keep in mind that what a startup declares in its marketing message (e.g., that it is a market leader) may not be completely reflected in reality.

Create an account in the service and analyze whether and how the service/product changes over time:

• whether the dynamics of change are noticeable (e.g. new functionality, layout),
• whether the project gives the impression of being stopped in time (no visible changes)

Fundamental (major) changes in the project (or their high frequency) may indicate investment in the future of this business and its current financial health.

Investments in unprofitable projects are stopped after about 3 years (however, this depends on the investor, who for various reasons may finance such an unprofitable project for a longer period of time).