From Exit Strategy To The Startup Team, Check Out What VCs Are Really Interested In
Smart PPTs. Check.
Files and documents in order. Check.
Smart clothes, perfume, no bad breath. Check.
Hairstyle, pen, handkerchief, size of handkerchief, its position, right-hand shake or left hand, which leg to cross, spine erect at 90 degrees or 91.8 degrees……..so on and so forth.
Coming home after breaking neighbour’s windows, appearing for board exams, asking your beloved’s hand for marriage – the list of situations where individuals find themselves anxious about every small detail is rather big. Recently, another such moment has made it to the ‘chant all is well’ list. Meeting with venture capitalists.
Those brooding (not always!) investors sitting in line, dressed impeccably and looking at you like a firing squad in a concentration camp, hold the one thing that your business needs the most money. The world over, many successful entrepreneurs have shared their moments of anxiousness while meeting with VCs for the first time, and have seemed surprised to find that they are humans, and are actually often good people.
VCs are in effect, businessmen or veterans of the industry themselves; thus, they are more concerned with the macro aspects of your proposal, which does not include the font inconsistency in your PPT.
Mentioned below is a list of a few checkpoints that an entrepreneur needs to focus on before the D-day to stop fretting over the insignificant stuff and ensure money flows like manna from heaven into your business.
6 Check Points To Good First Impression On VCs
Feel The ‘Pulse’ Of The Industry
Investors focus immensely on the promise of the overall domain in which your business wants to engage in. From FMCG to retail, agro or fin-tech, different industries have crests and troughs based on market conditions. An investor will always be keen to find out how big the market is, how much it is expected to grow, and the main drivers of its growth. Investors believe in the old adage-‘rising tides lift all boats’ – and are always looking for new and promising sectors to invest in.
Who Does Your Superhero Team Comprise Of?
Apart from the concept and the competition, VCs also concern themselves with the team that will lead the business and formulate its major policy decisions. The skill sets, diversity, domain knowledge base, and complementary expertise in cross-departmental responsibilities such as research and development, sales and marketing, product development, etc. of your team are factors that VCs carefully evaluate.
Additionally, the chemistry within the team and understanding of the hierarchy also plays a crucial role in determining whether the VC will play Nick Fury to your Avengers or not.
The Existing ‘Hall Of Fame’ And What They Get
Previous investors, their profiles, issued stock valuation, the control of the investors and shareholders etc. play an important role in motivating an investor to put money into your business. Providing too little either in terms of control or profits makes a VC lose interest while being eager to give off control and decision-making powers gives an impression that an entrepreneur is out there just to sell off the business and absolve himself/herself completely of all the responsibilities of running the show.
Who’s Breathing Down Your Neck?
The current competition of a business is an important parameter to determine VCs excitement regarding a project. A business sector with existing well-established service providers would require significant initial expenditure into devising a strong marketing strategy that establishes the brand in the market.
Furthermore, it would always have to be wary of any steps taken by the competitor. On the other hand, a business in a completely new domain enjoys the first-mover advantage, yet it might possibly take a longer time to establish a feasible client base since consumers are not aware of the demand present for that service or are apprehensive regarding purchasing a product without any alternatives.
Working Out The Paperwork
Entrepreneurs should not always be concerned with new ideas or looking out the window thinking about path-breaking innovations but should get down to the often boring, but extremely important task of preparing legal documents. From articles on incorporation, service agreements to the board and shareholder meeting minutes’, VCs prefer applicants who have all the paperwork ready.
The incorporation documents provide a window to the VCs regarding the internal structure of the company, and an entrepreneur who not only presents complete legal documents but is also aware of the various intricacies in them, scores several brownie points from the investors.
Show Them A Beautiful ‘Exit’
VCs always like a beautiful send-off, euphemizing it as ‘Exit Strategy.’ Exit strategy refers to the money and not the exit of the entrepreneurs per se. Essentially, it means that startups bring in the money and investors get the money out. Exits of investors usually happen in two ways – either a) a bigger company acquires the startup for enough money to give the investors the invested amount or b) the startup develops and flourishes enough to sell shares of stock to the buying public over a public stock market.
Entrepreneurs need to know that scalability is extremely important for most investors since it gives investments the best chance to grow quickly.
