If you’ve ever watched Shark Tank, you’ll get the idea here, but I’m going to take you through the TEN things that VC’s typically look for when considering a new investment.
The Founder
Are you a leader? Are you impressive? Are you attractive to investment? Would YOU invest in you? You are the person they will put their money behind.
The Team
Do you have the ability to bring on impressive people that compliment you and can help advance the company to the next level.
Large Market Opportunity
Unless you’re selling islands or Lear Jets, you typically need a BIG market that has a lot of people to sell to. VC’s love BIG markets.
Differentiation
What makes this unique? Why should they invest in you if you are so similar to your competitors? Your offering has to be different than what is currently in the market.
Margins
They’re going to want to know what the margins are. The greater the margins, the greater their interest will be. Check your costs and aim for the highest margins possible.
Traction
You have something that is working. You have customers interested in it. Show you know how to attract and sell customers.
Costs
What is are your costs to acquire customers. What are your costs to fulfill? What are you paying yourself and your team?
Existing Debt
Who else has a stake in this company? Who else have you sold equity to? This will come out. Be careful about debt you take on early, especially when it comes to giving out ownership.
Intellectual Property
They want to know you are protecting the company. They’ll ask about patents and trademarks. They want to see no threats to the company in the next five years.
Big Win
This is what they are looking for. All of the previous nine things in this list lead up to number 10. Seven out of ten of their investments may never succeed but they could have one that pays for all their losses and gives them an upside.
