What do Investors look for in a Startup?

Investors look for in a Startup

There are many who wish to read the investors’ minds to act accordingly. The most important question they ask themselves is  What do Investors look for in a Startup? Investors are alike; they have different viewpoints and hence they have different look afters. Nevertheless, there are some common angles from which they grab an opinion as to invest or not. Because it is not simply an aimless gunshot to place their hard earned money in a start-up knowing nothing about it.

In general, the common angles of the investor can be four M’s – market, management, money and momentum, as outlined by Mark Suster, but perhaps, those are not just enough for every investor to come to conclusion. Dr. Malpani provides a different outlook that it is primarily based on the mind-set, trust and confidence of the entrepreneur/founder.

With most of the Entrepreneurs in India being in their early 30s, investors look for someone who is frugal, flexible, full of determination, and fervent. In other words, the entrepreneur should be able to not only lead his crew, set goals, and manage a budget, but also rise to the occasion when the going gets tough. There sure are going to be bad days for a startup; be it the revenue, be it the competition, be it the technology.

The ability of the Entrepreneur to build the trust, self-conviction and an eagerness to learn inspires the investors. Moreover, the innovative quality and agility backed by the energy, and problem-solving skills. In him, they look at a model which the Indian middle class can follow. Sometimes, their insight into the mind of an entrepreneur is to even mentor and guide a company and do some value additions to the proposals.

But what primarily is sought-after by the investors in a start-up, according to Dr. Malpani, is the vision of the entrepreneur whether he can make the investor fall in love with his concept, and whether he is really into it, giving it all he could, and whether he can learn to navigate himself and the team even through the darkest of times. He even adds that it is the founder who makes all the difference, in spite of all the luck involved. He concludes that if the Entrepreneur has earned the respect of the investor in process, he will get a pat on the back in the end.

Note from Author:

This article is a confluence of Dr. Aniruddha Malpani’s (Director at Solidarity Investment Advisors) words and research on on what exactly does Angel Investors look for in a startup.


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