Did you know? That only about one-fourth of early stage investors backed companies end up reaching to the first series of funding. Anupam Mittal, Founder, People Group invested very earlier in Ola Cabs that investment has fetched him returns that most early stage investors don’t even dare to dream, but that’s just a rare scenario. Although, the investment ecosystem has evolved over the years, but the reality for early stage investors is still not rosy.
In fact, most of the Angel Investors to safeguard their capital investments are investing in groups with a ‘Lead Investor,’ who are industry stalwarts. If a Lead Investor is interested in a startup it is very likely that it might find a total of five to six investors pool in the capital, hence decreasing their individual financial risk.
Attracting an industry expert lead investor for backing your startup is not a cakewalk. So after a lot of research and interviews with leading angels of our country we have formulated these ‘Need to know’ tips that every entrepreneur should know before they start their business.
1. A Full-time team
Rehan Yar Khan General Partner, Orios Venture says, “Remarkable companies are due to their teams.” The team is by far one of the most important criteria that most of the investors look into. Most investors prefer startups with at least two to three Co founders. There is nothing more important than a full time, strong, well-connected and passionate team to run a successful startup. All the other aspects of a business can be managed eventually, but if the founding members cannot come together on a strategy or can’t get along with each other than that startup will eventually fail.
2. Clear Solution for a Substantial Problem
The problem should be substantial and it should be based on facts and figures and not the one’s that is copy pasted from the recent PwC reports. Personalized accounts and interactions with people facing the problem your are targeting is the best way to present according to many investors. Once you have established the pain point you want to address then the next step is to design a clear and uncomplicated solution for it. If your solution is complicated, it's less likely that you will be able to solve it, with the unclear approach ironically it’s more likely that you may just add another problem rather than solving it.
3. Market Potential Businesses
As explained earlier, Angels now invest in packs to minimize the risk and if your startup is not indicating any signs of sustainability and scalability then you will soon find yourself in hot waters. Absolutely, no Angels will invest in your startup if your market size is restricted, it should have the potential to grow. It’s a simple calculation! If your startup is unable to give better returns than average market returns why would they invest in you!
4. Be disruptive with technology!
Technology is changing the way we do business today. The key factor that can work to make a startup successful is by only if the founders understand and embrace the technology. Early stage investors look for startups who are disrupting the status quo with technology. How are you being different from the established players in the market? The plain and simple answer to this is by disrupting the current model with the help of technology and leapfrogging the challenges that are faced by the current players.