Raising funds is now an essential part of the startup process. Every now and then, we hear about startups raising millions or billions of dollars in funding. Investors put a lot of money into their investments, but how do they decide where to put their money and who to bet on?
An investor considers many factors when evaluating a startup, including industry stage, market size, market share, burn rate, and other factors. However, almost always in early stage startups, the bet is placed on the entrepreneur and not on anyone else.
So, what qualities are investors looking for?
It may differ slightly from one investor to the next, but it is generally the same for most investors.
Their role as an early stage investor is not simply to put money in and wait to see what happens. They devote their time, skills, and connections to assisting the entrepreneur. They also contribute to the startup’s success. So, they want to feel significant and useful.
The first quality they look for in an entrepreneur is coachability. It’s easy to see why. Because their money is invested in the startup. The investors are usually entrepreneurs who want to see the startup succeed through their skills.
So they want to take steps to get it on the right track, but if you are arrogant enough to ignore them, they will have no influence over their money. It would be a total bet.
They don’t like it and want to protect their money while also helping startups succeed. As a result, they seek coachable entrepreneurs.
The second quality is somewhat contradictory, but it is true. They want you to be knowledgeable in your field and thus not be a Yes Man.
It should not be as if you just accept whatever they say. If they have more domain knowledge, why should they invest in you?
You should only take what you can understand and is extremely beneficial.
But they want you to think about it and even conduct small tests. They want to play a role, but ultimately, they want to increase their wealth.
So these are the two most important characteristics they are looking for. There are other characteristics as well. They want you to be a good communicator, a simple thinker, and sometimes frugal.
But these are the most important considerations. If you have these characteristics, great; if not, you can instil them. If you don’t think you can, focus on great product and you’ll get what you want.
Just do the best whatever you do, and things would go very good.
