What makes a startup interesting for investors - A presentation by Prajakt Raut

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At a recent pitch session organised by 10,000 Start-ups, founder of the The Hub for Startups and VP of the Indian Angel Network, Prajakt Raut gave a presentation to young start-ups telling them what makes a start-up interesting for investors.

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What makes a startup interesting for investors - A presentation by Prajakt Raut

  1. 1. What makes a startup interesting for investors?
  2. 2. Investors assess if a startup is a good investment opportunity Unless you can convince them that your startups will create value, investors will not be interested For angel and early investors, profitability is not THE KEY criteria, because they are not keen on a ‘dividend’ play – they are playing for higher valuation (Investors will look for 5 – 10x + returns in about 3 – 5 years…)
  3. 3. Investors look for the business around the concept or product or service. Hence, in your pitch, cover the following: - What are you going to do – concept - How are you going to make money – business case - The size of the opportunity – potential - How are you going to do it – implementation plan - Current status - Who’s behind this - team - How much money do you need – to attract the next set of investors
  4. 4. Investors look for competent and committed teams - Passion and deep interest in the domain - Deep understanding of the dynamics of the business around the concept – who will buy, why will they buy, challenges, etc.
  5. 5. Investors look for plans with practical milestones But large aspirations
  6. 6. Investors look for teams with focus in the initial phase Even when entrepreneurs have identified multiple opportunities with the concept
  7. 7. Investors look for a strong implementation plan “According to Gartner, the market will be USD 20 bn in 2020” is not a reason to invest How you will get the first 1000 users or first 2-3 enterprise customers is.
  8. 8. Investors seek teams that have a clearly identified immediate goals and tasks What do you need to do to launch? What are you going to test?
  9. 9. Investors seek a plan that clearly outline how much funding is required, where it will be used and what it can achieve You should seek from angels only as much as you require to go till you can attract VCs In rare cases will angel funding be sufficient to take the startup to profitability
  10. 10. Finally, investors look for teams they can trust Be honest about risks & challenges, be open about limitations and weaknesses When you tell them where you need help, will they be able to provide inputs
  11. 11. In Summary Investors invest in a business case around products/services that address large markets Investors invest in high-quality teams with large aspirations and who have a clear understanding of what it will take to achieve the potential Investors invest in clearly defined plans with practical milestones Make the investor go back feeling “What a great concept. I think the market is large and the team will deliver.”
  12. 12. Prajakt Raut Founder – The Hub for Startups VP - Indian Angel Network __________________________________ Blog: www.thehubforstartups.com Twitter: @prajaktraut Facebook www.facebook.com/thehubforstartups

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