At the time you decide to create your own startup venture, the essential thing is to comprehend how venture capitalists evaluate other startup ventures. VCs are doing it for several years now and you need to follow them to assess how good your startup is. It is not that your startup cannot succeed if you do not meet their criterion but it can certainly help if you can follow some of their guidelines. Venture capitalists consider various things to decide which startup they will invest in. Let us look at some of the points they generally take into consideration.
Describe the Problem you are Addressing:
The first question VCs will look is market requirement your startup is going to address and why it would be necessary to meet that requirement. As for example, it is complex for a car rental company to take the passenger from one point to another and they require a good app to help with the navigation. You can better your chances if the problem can be presented in a way that VC can relate to it and it sounds personal.
Solution Planned for the Problem:
It is as important as defining the problem and you need to provide a unique solution, which should be better than other available solutions for the problem. You need to be able to clearly define it, demonstrate how it will work and how you will develop it. Keep in mind that venture capitalists are normally generalists and going too deep into the intricacies of how things will work is not going to work.
Market Analysis:
You need to be clear about the customers you want to target, and whether the market is big enough to provide you with growth opportunity. A detailed study will be necessary to figure out scope of the whole market, the market segment you will be focusing on, timeline within which you will get into the market and attempt to capture it. Remember that VCs will be interested if the market opportunity is big.
Competition You will Face:
Are there other companies in the same market competing with you to grab a share of the market? What is your startups USP that customers will like and separates you from the competition? How you will keep yourself ahead of your competitors? You will have to be ready with answers to these questions before meeting any VCs. Your best option will be to mention that you will be able to put barriers so that competitors are unable to grab a share in the market as well as take steps to stay ahead of your competition.
Describe Your Team:
For your startup to succeed, you need to have a good team to support you. You will have to share details about your team members, about their backgrounds and reasons you think they are the best people to run this startup and make it successful. What will be the plan of action to scale up and accomplish all the goals that you have set for future expansion of your business? This will be one of the main questions that you should have right answer for, since these people will stay with you a long time and face many a hurdles with you. In case there are obstacles along the way then your team should be capable enough to recover properly and bring the business back on the right track.
Summary
If you want to secure funding for your startup then you should have a well thought out plan for it. Venture capitalists would be testing how confident you are about success of your and you need to be prepared for it.
