At a recent pitch session organised by 10,000 Start-ups, founder of the The Hub for Startups and VP of the Indian Angel Network, Prajakt Raut gave a presentation to young start-ups telling them what makes a start-up interesting for investors.

1. What makes a startup interesting for
investors?

2. Investors assess if a startup is a
good investment opportunity
Unless you can convince them that your startups will create value,
investors will not be interested
For angel and early investors, profitability is not THE KEY criteria,
because they are not keen on a ‘dividend’ play – they are playing for
higher valuation
(Investors will look for 5 – 10x + returns in about 3 – 5 years…)

3. Investors look for the business around the concept or
product or service.
Hence, in your pitch, cover the following:
- What are you going to do – concept
- How are you going to make money – business case
- The size of the opportunity – potential
- How are you going to do it – implementation plan
- Current status
- Who’s behind this - team
- How much money do you need – to attract the next set of
investors

4. Investors look for competent and committed teams
- Passion and deep interest in the domain
- Deep understanding of the dynamics of the business around
the concept – who will buy, why will they buy, challenges, etc.

5. Investors look for plans with practical milestones
But large aspirations

6. Investors look for teams with focus in the initial
phase
Even when entrepreneurs have identified multiple opportunities
with the concept

7. Investors look for a strong implementation plan
“According to Gartner, the market will be USD 20 bn in 2020” is
not a reason to invest
How you will get the first 1000 users or first 2-3 enterprise
customers is.

8. Investors seek teams that have a clearly identified
immediate goals and tasks
What do you need to do to launch?
What are you going to test?

9. Investors seek a plan that clearly outline how much
funding is required, where it will be used and what it
can achieve
You should seek from angels only as much as you require to go till
you can attract VCs
In rare cases will angel funding be sufficient to take the startup to
profitability

10. Finally, investors look for teams they can trust
Be honest about risks & challenges, be open about limitations and
weaknesses
When you tell them where you need help, will they be able to
provide inputs

11. In Summary
Investors invest in a business case around products/services that
address large markets
Investors invest in high-quality teams with large aspirations and
who have a clear understanding of what it will take to achieve the
potential
Investors invest in clearly defined plans with practical milestones
Make the investor go back feeling “What a great concept. I think
the market is large and the team will deliver.”

12. Prajakt Raut
Founder – The Hub for Startups
VP - Indian Angel Network
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Blog: www.thehubforstartups.com
Twitter: @prajaktraut
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