What do investors look for in a startup?

Your pitch is the first impression of you that an investor has, and it is important for you to meet the expectations that investors have from you. Here are the top few points we look for when you pitch us the idea for raising funds.

1. Do they understand realistic financial figures? Entrepreneurs should give the potential investor, exact financial amounts for their desired investments, equity and offered stake. They should also display a road map or plan to explain the use of these funds in scaling the business.

2. Does it solve a problem? Founders pitching you should understand the main points their product or service are addressing. It should be directed towards solving an existing problem or help fill a gap.

3. Are they well-informed on the industry climate and competitors? Ideally, the startup founder should be well versed in the product’s field, will be aware of the company’s toughest competitors, and be well-informed of the current industry dynamics and trends.

4. Do they have a prototype & any set deadlines ? A product prototype allows you to connect an idea to the real thing. If there’s nothing to see or experience, it’s all theory — and theory isn’t easy to bet on. Tangible deadlines not only show that the entrepreneur is serious about getting the necessary funding and being organized but that he or she is committed to this venture for the long-term.

5. Do they sense passion in their work? Entrepreneurs have to be a 100% committed in their start-ups. This usually means letting go of any side jobs that might affect their performance in the business. This shows your commitment and dedication to invest your time for the success.

6. Do they have a map of the projections (costs, pricing, margins)? Two Points that you want to look for: you want to see the gross margins better than the competitors in approximately 50 percent range or higher, and the venture should also have a large enough total addressable market to cater.

7. Do they have a customized marketing strategy and sales plans? There is a lot more to the business than the product itself and the gross margins. What about plans for distribution? Customer acquisition costs? Partnerships? Sales channels?

The next time you pitch your idea to an investor, keep these points in your mind and speak with confidence. Above all have belief in what you are bringing to the table. To those who are looking for investors, send us your pitch deck to contact@seedvc.in.

Associate at SeedVC / Author of ‘Vanilla Drops’ / Digital Creator