7 things investors would love to see

By Seshachari, May 7, 2018

Founders seek the best investors and vice-versa, and this is what keeps the business cycle going. Founders primarily selling the dream team, confidence in how they are going to realize the business potential to scale, great profits and liquidity for the investor.

It would really work very well for a startup which shares business goals and long-term objectives in the initial stage itself to attract investors and get funded timely. Investors, being seasoned business personnel themselves, envisage startup teams to be practical, realistic, stable and build a solid, exemplary organization/business over-time.

1. Sell your vision: Your vision drives motivation, so be sure to make it crystal clear. When you present your vision, show the investor how every aspect of your business is aligned with your goal. Express to investor where you want to be and how you will get there, not just what you currently have or are. Investors are looking for people with a passion, who know their business and ways to reach their goals.

2. Investors Look at Teams, Not Ideas: Ideas come and go, but an agile team can pivot. Investors look for the potential in teams before they worry too much about ideas. It’s the team behind the business that matters, agile teams are more likely to spot problems with the original idea and pivot in time to make a new idea more profitable in the long run. So focus on building a dream team that is efficient, works well together, and makes a new idea more sustainable in the long-run business model. Investors tend to work closely with agile teams, evaluating their team dynamics and skills during funding stages, and they are very personality driven in that sense. – don’t avoid conflict; make a plan for it.

3. Market: What’s your Market Size and Value? Founders need to know these numbers inside and out. Investors would like to see the big picture of the market, that they have a chance of making a huge return on their investments or it’s simply not feasible for them to invest.

Hence, while proposing a market opportunity, segment the market into 3 distinct groups: Total Addressable Market (TAM), Serviceable Addressable Market (SAM) and Serviceable Obtainable Market (SOM). This will tell your investors what the potential market opportunity is and estimated true size, rather than just some vague numbers you pull from thin air. A top-down estimate is the first step. Use industry-analyst reports, market research reports, competitors’ press releases, university libraries and discussions with investors and customers to “size” the overall market. Use whatever metric is most appropriate – units, dollars, page views, eyeballs, whatever, and, a bottom-up estimate is usually more realistic for startups.

4. Is there a well-defined Structured customer development process in place: Customer development is all about testing the right hypotheses at the right time with the right data. It lays out a process that stretches from the very first hypotheses about what you are creating to the questions of how to scale your innovation and, eventually, how to institutionalize it for long-term sustainability and growth. Customer development is the practice of gaining customer insights to generate, test, and optimize ideas for products and services through interviews and structured experiments.
1. To test assumptions about customer needs/problems & develop a Minimum viable product (MVP).
2. To seek validation that users are involved in product/solution, demonstrated a viable business model.
3. To create demand and improve the pipeline of customer acquisition and
4. To build the company to drive scale & execute the business model.

5. Underline on Metrics: Focus and highlight on revenue generation metrics, such as user base, user base growth over a month, conversion rates, month-wise actual revenue, annual run rate, Month-over-month revenue growth, burn rate, MRR, ARR, Churn & renewal rates, Cost of customer acquisition vs customer lifetime value and pricing / model.

6. Do you have a Strong Differentiator: Creating a Moat i.e. competitive advantage. Differentiation allows providing superior value to customers at an affordable price, creating a win-win scenario that can increase the overall profitability and viability of your business. The product needs to include a ‘secret sauce’ that will counteract a competitor i.e. Having something completely unique and which is hard to replicate / Tech algorithm / Data / a price point for less or for more /  super niche market that fits business / use of superior better, faster technology / unique solution, or proposition offered in a distinctive way / More efficient in process differentiation / one or more combinations of these.

7. Leverage social media as social proof: Generate some early activity with pilot customers who will provide testimonials, not only that your product makes sense, but that if it existed today, they would buy it. Display the Praise from current customers and/or brand advocates in the form of tweets, Facebook posts, Instagram comments, etc.

There are a plethora of tips and tricks that might be out there, but to win over the confidence of the investor startup founders have to be well prepared and organized when they approach an investor.  They have to make sure that the investor gets a solid understanding of what you are trying to do (Big picture) – It’s not an easy road, but it’s definitely worth taking your time and doing it right.

Author Profile
Seshachari

Chari as an SVP Business & Delivery - Global, brings over 25+ years of experience in the IT. Chari is responsible for P&L, setting up of GDM Delivery engine-Defining, Implementing and Managing large team setups, driving continuous stream of Innovations and Business Transformation for Value Creation and Revenue Generation with centre of excellence focused on Business/Vertical Priorities through non-linear growth, creating multiple IP's - Value Solutions Development Framework (VSDF), integrating components using next-gen technologies like BPM/SOA/ ESB/ J2EE platform & solutions to its global customers.

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Seshachari

Chari as an SVP Business & Delivery - Global, brings over 25+ years of experience in the IT. Chari is responsible for P&L, setting up of GDM Delivery engine-Defining, Implementing and Managing large team setups, driving continuous stream of Innovations and Business Transformation for Value Creation and Revenue Generation with centre of excellence focused on Business/Vertical Priorities through non-linear growth, creating multiple IP's - Value Solutions Development Framework (VSDF), integrating components using next-gen technologies like BPM/SOA/ ESB/ J2EE platform & solutions to its global customers.

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