What do investors look for in startups?

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Mentor Talk by Ishita Agrawal, Mentor and Associate Director - The Hatch for startups
on 27th September 2012 at The Hatch Incubator, Chandigarh

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What do investors look for in startups?

  1. 1. What do investors look for in startups? Ishita Agrawal Mentor and Associate Director - The Hatch for startups 27th September 2012
  2. 2. Different stages of the venture carry different risks Scale Stage
  3. 3. Risks at early stage• Concept risk• Execution risk• Scale-up risk• Technology risk• Market risk
  4. 4. Risks at growth stage • Execution riskRisks at early stage • Scale-up risk• Concept risk• Execution risk• Scale-up risk• Technology risk• Market risk
  5. 5. Risks at growth stage • Execution riskRisks at early stage • Scale-up risk• Concept risk• Execution risk• Scale-up risk• Technology risk Risks at mature stage• Market risk • Scale-up risk
  6. 6. Scale Stage
  7. 7. Angel Investors
  8. 8. VCs
  9. 9. PEs
  10. 10. Investor Incubators and Angel Investors VCs PEstypes Accelerators Concept Stage Proof of Concept Growth Stage Late StageStage of Stageinvestment • Rs. 0 – Rs. 25 lakhs • Rs.25 lacs to Rs. 2 • Rs.2 cr - Rs.50 cr • Rs.50 cr +Typical crinvestmentsize • Typically between • Typically between Rs.25 lacs – Rs.50 Rs.2cr – Rs.10 cr lacs
  11. 11. So, what do investors actually invest in?1. Business case2. Team – competence and commitment3. Quality of the plan4. Is the opportunity large enough
  12. 12. What do investors not invest in?1. Ideas without a plan on ‘how to’2. Teams with low aspirations3. Concepts addressing small, niche markets4. ‘Good UI’ – investors don’t invest in just the ‘what’s visible’ – they invest in ‘what’s inside’ • E.g. E-commerce
  13. 13. What phrases do investors hate?1. “We have no competition”2. "We are cheaper, hence we have a stronger value proposition”3. "According to Gartner, the market is USD 80 billion by 2015”
  14. 14. What do investors want to see in yourpresentations?1. Well-thought out plan on ‘how’2. Practical assumptions3. Clarity of thought4. Ability to articulate and ‘tell a story’5. Honesty – including things that you identify as your weaknesses
  15. 15. What should you include in a business plan? • Concept overview + Pain point or opportunity addressed • Team • What is the size of the opportunity • What is the value proposition/positioning • Business model • Competitive landscape • Operations plan overview • Risk factors • Funding needs and use of funds • Exit potential
  16. 16. Investors invest in any sectorwhere market opportunitiesexist
  17. 17. Live Traffic Online platform forinformation for buying school relatedroad commuters requirementsSales force Online Musicautomation platformGroup buying for Date protectionhouses software Online groceryPhysical stores for storecell phones
  18. 18. Rural BPO Analytics Robotics solutionsMedical Devices for retailOnline assessments Electronic components Sports leaguesEducation Programs management
  19. 19. Questions

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