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What Grabs VCs Attention for Investment? by Next Step | posted: 03/16/2016
After receiving initial seed or friends and family funding to build your offering and gain initial customers, you are ready to attract your next round of venture investment. US investors, which account for nearly 70% of the total global venture capital, may be very attractive to you. However, they receive thousands of business cases and hear hundreds of pitches each week.
If you have the opportunity to pitch to or meet a VC in the US, it is critical that your presentation demonstrates that you are:
- Experienced in building a successful company
- Bringing forward low risk opportunity that can deliver a high return within 3-7 years
As the VC listens to you, he or she will be listening for:
- Opportunity for profitable return with minimal risk… You need to demonstrate there is real financial benefit at exit.
- Revenue – a strong and sustainable revenue stream.
- Profitability and/or a clear path to breakeven.
- Does the company / offering solve a real, recognized customer problem?
- Founder is self-aware, open to feedback and willing to test a variety of product concepts and paths to market to achieve success.
- Possible synergy between this company /idea and others in their portfolio.
- Viable market size to drive a profitable return – tampered with credibility of the company’s ability to capture an acceptable share of the total addressable market.
- Founders’ domain expertise and experience (along with network and knowledge of the target customers and their issues).
- Has the leader / entrepreneur and this team successfully built a company and had a lucrative exit in the past?
Gaining investment from a top tier venture capitalist can provide the power and substance for long term growth. However, gaining enough interest and attention of a VC requires preparation, practice and insight into the specific interest areas for each person to whom you pitch.