How venture capitalists make investment choices?

India is a country with people full of unique and innovative mindsets. According to expert research, 65% of the population of the country is between the ages of 25 and 35, which plays a major role in contributing to India’s startup boom. However, the 2008 recession served as the primary driver of the rise of startups in the region. Today, India is home to over 77,000 DPIIT-recognized startups across 656 districts and has emerged as the 3rd largest global startup ecosystem as per industry professionals.

This goes without saying that one of the most important resources for startups to develop is capital. There are various options available in the market when it comes to seeking investment, such as angel investors, venture capitalists and many others. However,, your startup must make a convincing case for investors to invest in your firm. The three main criteria that venture capitalists look for in a possible investment are a competitive advantage, a solid pounding team, and consumer validation. If your startup possesses all three of these, there is a significant likelihood that you will be able to persuade the investors.

Things venture capitalists keep in mind while making investment choices

Strong Founding team: Undoubtedly, founders are the most crucial factor that majority of the venture capitalists take into consideration while making an investment decision. It is safe to say that the capitalists are not just investing in your startup but there are investing in you. They look forward to a founding team with the capability of promptly carrying out business plans. On the whole, they want to be certain to invest in a company that has the ability to build a successful business and will generate high returns for the investor as well.

Your USP: Before investing in your startup, venture capitalists need to know what is your USP and what makes you different from your competitors. They potentially look for a unique product or service that is new to the industry and will make significant contributions to the marketplace. Overall, their aim is to ensure that the startup in question is capable enough to generate sales and profits even if competitors penetrate the market.

Consumer affirmation: There is no getting away with the fact that the customer is the king of the market. In the end, the goal of every startup is to provide value to the customers and generate maximum sales, which benefits the startup as well as the investor. Thus, venture capitalists look for the viability and feasibility of the business in the long run and what benefit it will bring to the investor himself before investing in the concerned company.

All things considered!

Investment lays the groundwork for a startup’s growth and development. Hence, for founders, it is more than crucial to find the right venture capitalist to invest in their business. But finding a venture capitalist is not that easy. These  y put a lot of effort in researching potential investments and screening them before investing. They are interested in whether your team is capable, how you distinguish from the competition, your customer validation, and potential future profitability. Hence, when looking for an investment, make sure your startup is solid in order to convince the venture capitalist.

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