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These days, many start-up founders are hyper-focused on winning venture capital funding. Many who fail to get some VC love end up asking friends and family for seed capital. How do VC’s tell whether something is worth investing?
Invest in people, not ideas in a pitch deck
As markets around the world face ever-accelerating pace of change, the pursuit of relevance is a strategic imperative for entrepreneurs and start-up founders alike. But I think the fundamentals of innovation do not lie in the process of turning an idea into products that people want. As much as the first-mover advantage holds true, ideas can be taken, copied and most importantly improved. That’s why when VCs meet a great start-up, they don’t simply measure ideas vs. product/market fit, but also the founder’s belief in a thesis and ability to execute on an idea.
A common consideration for VCs is to ask: “Why now?” We’ve repeatedly seen start-ups fail in EMs simply because the market is not ready yet.
VC funding is not just about exits and IPOs: a well-executed investment allows the start-up to accomplish more and receive valuable mentorship from VCs with the right sort of background. Uncertainty is the reason why opportunities exist for VCs to gain returns from start-ups, especially when others don’t see the potential for success.
Focus on market trends, but don’t obsess over them
Today, the market changes really fast. Many things in technology that are growing today will change in a year’s time. Regardless of whether these changes are gradual or sudden, we often focus on the “here and now” so much that we forget to slow down and understand the situation.
