Startups are different from regular companies due to their rapid growth and unparalleled dedication to what they’re doing. However, even if you’re breathing and living your (very promising and totally unique) startup, but lack financing, it is very unlikely that it’ll ever make it to the market and fulfill your ambitious plans.
Luckily, angel investors and venture capitalists are out there, ready to provide funding – but they won’t do it unless they’re 100% sure it is worthwhile and they will not only receive their money back, but also get a very considerable revenue out of it.
Before you rush to search for an investors database to start pitching them there and then, see what features they are looking for in a startup to boost your chances of obtaining the necessary funding.
What Investors Care About the Most in a Startup
Well, if yours is a digital product or a SaaS, your chances automatically grow since they are scalable and not limited geographically. What other elements of success in attracting angel investors are? Read on!
2. “Pro” founder/team
According to this survey of SaaS investors, the top thing they are looking for when assessing a potential investment, is an expert founder and an excellent team. They used the attributes like “product centric”, “mission driven”, “team-oriented”, “with deep knowledge of competitors” “able to convince people” and “create a vision” to describe the founder of a promising SaaS.
On the other hand, the team should be “hungry & talented”, “insiders to the pain” of the customers, and be able to “handle 20x the size of today”.
3. A proven track record
Passion and dedication have already become buzzwords when talking about startups. Coupled with a terrific idea they makeup a blend with great potential… but it’s not enough to convince most of the people on your investors list.
The thing is, to put your ideas into action, passion is not enough. Certain business, administration and analytical skills are indispensable for a successful project. Therefore, having a person with decent past experience in your management team can improve your startup rating among the whole database of investors who might be interested in funding your company.
If there aren’t such people – consider hiring them from the outside, they will serve a sort of a guarantee for venture capitalists or angels that the invested money will be properly used and generate more in return.
4. Quality product with a competitive advantage
Startups should be able to clearly communicate why their product is different than the competitors’ (not only existing, but also future ones), and what is its competitive advantage.
They will typically study the customer feedback (or evaluation, for new products), which is the best indication of a top notch product, and prefer those that are virtually indispensable for customers.
It is of no less importance for the investors what key customer problems the product can solve (and the type of a customer ready to pay for it). Deep understanding of the pain points can be more crucial for the team than knowledge of the market.
5. A (really) large market
The whole database of investors is interested in a really large market – at least $500 million, or better $1 billion, because it means a significant potential revenue.
Be ready to demonstrate how you will get your product to market, a clear market strategy, evaluate how long the sales cycle is so that your investors know what to expect.
6. Minimized risk
It is natural that an investor about to pay a huge sum for the sake of developing your venture should be worried about losing their money. Therefore, prepare an exit strategy that shows how the funds invested can be returned if your startup fails.
Also, be ready with a damage control plan showing how you will handle potentially difficult situations (this will let your investors know you care about their money).
Where to find the database of angel investors?
So, once your product, team, business plan and strategy have been refined to the level of perfection and you’re sure there’s no reason any venture capitalist could refuse to invest into your startup, time to introduce it to them.
We at LeadWave have put in a lot of menial work to compile a list of 1000 angel investors and venture capitalists with validated emails and 12 more relevant attributes – check it out here and get going!