Features that Will Help in Obtaining New Business Funding

When startups are seeking new business funding, it is important for them to understand exactly how investors think & analyze opportunities. Though there are numerous factors that investors will take into consideration before channelling any funds into a start up venture, there are 3 aspects that stand out very prominently and a subset of questions follow. However, it is almost mandatory for these three factors to be met as well as agreed upon before they consider the proposal. Here are the 3 points that are a must in any start up sales pitch:

Is This a Future Billion-Euro Company?

Whenever any venture capitalist hears an entrepreneur pitch, this is the first question they are asking themselves. There is a definite chasm in between the way any entrepreneur views his/her company and the manner in which opportunities are analyzed by investors. Venture capitalists have to hit it big and they must invest in companies that will potentially hit the bulls-eye.

They are completely aware of the possibility that a large number of their investments might end up having not-so-fabulous returns and some might even sink to the depths of the ocean. However, potentially, the market size might just support a really big company. If the total addressable market of a startup is only a couple of billion Euros, VC’s are going to cold shoulder it (There are of course numerous other kinds of investors who will show an interest in smaller outcomes). 

What is The Mettle of the Team?

In early-stage startups, the team is the key to analyzing any potential success of the company. Investors will first bet on the team even before the pre-product stage and before any massive product adoption takes place. That is exactly why an entrepreneur with a proven track record has a higher probability of raising capital than one who is venturing into this space for the first time.

Teams who have actually worked together and created and launched successful products are considered to be even better contenders.  Some find it surprising that a pre-product & pre-revenue company receives venture funding. But delving a little deeper will reveal that there is a powerhouse team behind it. Venture Capitalists are top-of-the-rung when it comes to judging and analyzing businesses and their early bet will almost always be on people.

Is this the right time?

This is the last of the triad of basic questions. Venture Capitalists will always consider market timing. They will scope the market and try to ascertain whether the time is perfect for that particular product to be a launched and become a blockbuster. Essentially a VC funded business must be able to attain massive growth very quickly and growth is all about perfect timing.

The fire of disruptive ideas and technologies must also have the right tailwinds for the fuel of their new business funding to generate growth. Entrepreneurs need to understand and then include certain exciting statistics and market data which will impress venture capitalists enough to sink their funds into their business.