What Do Investors Look for in a Start UPS And It’s Founders

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When investors in Start UPS and Founders are considering an investment opportunity, there are some basic points that they look at before making a decision.

Passion and Integrity

No matter how good a concept or an idea is, unless an Investor is convinced of the passion and integrity of the founder/s, the investor would be reluctant to make a decision.

Skin-in-the-game founder

A founder can prove his passion by committing part of the investment so the investor knows that if the project fails, the founder also loses his capital. The founder should also not withdraw a hefty salary so as not to drain cash flow and not burden the P&L until the company is profit-making.

Valuation while raising funds

This is one of the sticking points, and many investors decide not to invest because they feel the valuation is too high. High and imaginary valuations are done by founders in order to give us as little equity as possible to investors, which discourages investors from making a decision.

Exit Strategy

The investor is generally concerned about ROI, how he will exit from the investment, and at what x. Hence, a clear exit strategy explanation is essential while seeking investment. The pitch must show how/when and what multiple investors can exit and what they stand to gain. It is also advisable that the investment amount carries a minimum return coupon so as to gain the confidence of the investor and also to satisfy the investor that his money is going to earn him the coupon while the investment is still alive in the company.

More Advice For Investors in Start UPS and Founders

  • Environment-friendly projects are in demand now. Minimum carbon emission, recycling natural resources, and sustainable projects are in high demand due to raised awareness of the critical issue for human survival. Hence, projects in such an arena are likely to attract more interest.
  • Investors prefer women-led projects and gender equality projects, and founders should look at either a woman leading a project or giving board seats to women to achieve these goals.
  • In general, an investor looks for an ROI of 25% yearly as a minimum and an exit goal of 3 to 5 years with a multiple of 5 to 10x his investment amount.
  • The capital raise should not be high enough that small investors find it undoable. Small and several rounds of capital raise are the answer to this instead of trying to raise bigger chunks in the initial stage. This can also benefit founders by asking for higher valuation as the project progresses.

In conclusion

Being realistic, passionate, honest, less greedy, and ready to share the fruits of their project with the investor community, they have a higher and better chance of succeeding in their projects.

7 Responses

  1. Thank you for the advice and for the information you provided it emphasizing the importance of a balanced and pragmatic approach for both investors and founders alike.

  2. Great insights! Emphasizing passion, integrity, and a genuine commitment from founders goes a long way in building investor trust. The advice on realistic valuations, clear exit strategies, and the growing interest in environmentally friendly and gender equality projects adds valuable perspective for both founders and investors.

  3. This blog provides valuable insights into what investors look for in startups and their founders. It emphasizes the importance of passion and integrity in founders, suggesting that no matter how promising an idea is, investors are reluctant unless they are convinced of the founder’s commitment. The concept of a “skin-in-the-game” founder, who invests a portion of their own capital and avoids hefty salaries, adds credibility to the founder’s commitment.

    The blog also touches on the issue of valuation, highlighting the potential pitfalls of high and imaginary valuations that may deter investors. The importance of a clear exit strategy, ROI, and a minimum return coupon to build investor confidence is emphasized. The concluding remarks stress the significance of being realistic, passionate, honest, and willing to share the project’s success with the investor community for a higher chance of success. Overall, it provides a comprehensive overview of key factors that investors consider when evaluating startup opportunities.

  4. This is a very informative post! The focus on environment-friendly and gender-equality projects is commendable. I’m curious about finding the right balance between valuation and funding. Looking forward to more insights!

  5. It was a great blog on Understanding what investors look for in startups and their founders is crucial for any entrepreneur seeking funding. The blog says about kung ano ang mga hinahanap ng mga investor para mag invest sila sa isang company, Ultimately, investors want to see potential for significant returns on their investment and confidence that the founder/team can successfully navigate the challenges ahead. and lastly mahalaga rin ang pagiging propesyonal at disiplinado sa pagpapatakbo ng negosyo, pati na rin ang pagkakaroon ng malinaw na pangitain at plano para sa hinaharap.

  6. This article emphasizes yung mga qualities na necessary for inventors sa pag simula ng startups nila. Kailangan may passion, integrity, and a strategy on how to approach the exit. While also acknowledging the importance of environmental sustainability and gender equality in attracting investments. Thank you for sharing the information, iPhiTech!

  7. The article offers practical insights for investors and founders, emphasizing the importance of passion, integrity, and realistic expectations in the startup landscape. Its focus on collaboration, sustainability, and societal impact resonates with the human side of entrepreneurship.

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