Although most investors claim to have a set of criteria they judge entrepreneurs and the ventures by, it is quite often a gut feeling or a “click” you need to have with either the founder(s), the concept and the value you as an investor can add.
Having said that, the following set of objective criteria relatively common and widely used:
- Experienced management team with ambition, drive, realism and dedication
- Innovative and robust technology and products
- Clear value proposition and ‘go-to-market’ strategy
- Realistic and scalable business model
- Fast growing market
- Options for strategic partnerships
Apart from that there are some “more emotional” factors that can decide to take on an investment, or shy away from one:
Be passionate and ambitious about the idea.
If you can’t convince us that you have a drive for your concept and an eagerness to transform that into a successful venture you are going to have a really hard sell.
Be likeable.
If we are going to put cash in your company, chances are, we’re going to be spending a fair amount of time together. (If not, then we are likely not investing anyways).
Demonstrate that you’ve made some progress on the product/idea.
We don’t invest when the first use of the capital is to go find a developer to help implement the idea. Even worse is if you’re dismissive of the risks of the entire software development process.
Be realistic about your capital needs.
The question you have to ask yourself is: What’s the least amount of money I need to build something that someone will pay a little bit of money for. A hint: It’s usually less than $50,000, which would still allow you with $25,000 left over to build what you should have built in the first place…
Seek analog business models.
Binary business models are a success or a failure. Analog business models are those that have incremental value all along the way.
Do your homework.
There are excellent resources for learning about the basics of how capital is raised and the legal stuff around it.
Inspired by copy from www.onstartup.com