Serhii Tokarev shows how hands-on product testing, market data, and objective analysis help investors evaluate startups and risks.
What You'll Discover:
Why Investors Should Look Beyond Financial Statements When Evaluating Products
Financial reports and business metrics provide valuable insights into a company’s performance, but they do not always reveal how customers experience its products. Trying a product personally can help investors understand its practical benefits, customer appeal, and potential for long-term growth.
Serhii Tokarev, an IT entrepreneur, investor, and founder of Tokarev Foundation, followed this approach when investing in Oura before smart rings gained widespread popularity. After investing in the company, he began using its wearable device, which tracks indicators related to sleep and physical recovery. The habit has also spread among senior members of his group’s leadership team.
According to Tokarev, using the product was not a determining factor in his original investment decision. However, it gave him a clearer picture of what motivates customers to keep using the device and paying for the service over time. This firsthand experience offered a perspective that traditional financial reporting alone could not provide.
What Products Like BitePal and ElevenLabs Reveal About Startup Potential
Tokarev and his colleagues also incorporate other technology products into their daily routines. One example is BitePal, a calorie-tracking application developed by Reface. Some of these tools have found their way into their family lives as well.
A product demonstration can explain its features, but consistent use offers a more realistic assessment of its effectiveness. Investors can determine whether a solution addresses a genuine need, simplifies everyday activities, and continues to provide value once the initial novelty disappears.
Revenue growth and sales figures can indicate that a product is attracting customers. However, observing how people integrate a service into their routines can provide additional clues about customer retention and the possibility of sustained demand.
This principle is equally relevant to professional software. ElevenLabs, for instance, uses artificial intelligence to produce voiceovers and dub video and podcast content in more than 70 languages. Its technology can also turn substantial volumes of written material into spoken audio.
Testing such a platform in real working conditions allows investors to evaluate several practical factors, including:
- Time efficiency: Whether the technology reduces the time needed to complete a task.
- Workflow limitations: Which stages still depend on human input or additional adjustments.
- Output speed: How efficiently users can obtain the results they need.
These observations help investors distinguish between impressive product demonstrations and solutions that deliver measurable benefits in everyday use.
How Personal Bias Can Distort an Investor’s View of a Startup
Although firsthand experience can be valuable, it also has limitations. Investors have different financial resources, working habits, expectations, and levels of technical knowledge. As a result, their personal responses to a product may differ significantly from those of its intended audience.
A technically experienced user, for example, might be comfortable spending time configuring a complicated tool. Someone less familiar with the technology could find the same process frustrating and give up before discovering its benefits. Conversely, an investor who does not face the problem a startup is designed to solve may overlook the product’s potential altogether.
Tokarev therefore emphasises the importance of recognising personal preferences when assessing a business. An investor’s enthusiasm or lack of interest should not automatically be treated as evidence of how the wider market will respond.
Understanding the needs of prospective customers, alongside testing a product personally, creates a more balanced basis for evaluating its commercial prospects.
Real-World Problems Can Reveal Valuable Investment Opportunities
Experiencing a problem firsthand can help investors recognise the practical importance of a solution. One example is Rollstack, a company backed by Roosh Ventures in 2023. Its platform automates the transfer of current data into presentations and documents, helping users avoid repetitive manual tasks and work more efficiently.
By seeing how a tool addresses an actual workplace challenge, investors can better understand the value it offers and the reasons businesses might be willing to pay for it.
Internal business needs can also become the starting point for entirely new ventures. Toogeza, a recruitment agency, was originally established to meet the hiring requirements of Tokarev’s group. Over time, the business expanded its activities beyond the group’s internal needs and began serving outside clients.
This example illustrates how identifying an operational challenge can lead to a commercially viable service with applications beyond the organisation that initially needed it.
Why Startup Evaluation Should Continue After the Investment
For Tokarev, analysing a startup is not a one-time exercise completed when an investment is approved. Markets evolve, customer expectations change, and products must continue to demonstrate their usefulness.
Investors who remain familiar with the products in their portfolios can observe how well they perform in practical situations, whether they remain relevant to users, and how effectively they support everyday tasks.
Combining this direct experience with financial analysis, customer feedback, and an objective assessment of market demand provides a more comprehensive way to evaluate a company’s progress. It also helps investors identify potential weaknesses and reassess whether a startup’s long-term prospects continue to justify their investment.
