Seeking venture capitalist funding is always challenging. But by understanding the top 5 qualities VCs look for, entrepreneurs can improve their pitches and strengthen their chances of receiving investment. It takes a unique type of person to be a VC. They have to be both brave and smart. They must understand and appreciate the challenges of the markets they invest in and their specific technology.
A genuine passion is one of the essential qualities VCs like Brad Kern look for in a founder. Passion is a driving force that can help an entrepreneur endure any challenge and overcome any obstacle that comes their way. It’s not uncommon for entrepreneurs to leave their full-time jobs and pursue their passion full-time, but they must do so correctly. This includes finding the core aspects of their passion, such as problem-solving or unravelling mysteries, and converting those into viable work opportunities. Passionate entrepreneurs must also balance their passion with maturity and a responsible pioneering spirit, as any venture into new and unexplored territory is bound to have its fair share of tumult. This is why it is essential to find a mentor who can guide them in the right direction.
Venture capital is a complicated industry. You can go months without seeing a good opportunity and pass on a company that turns into the next Airbnb or Uber. It takes a particular type of person to succeed in this business. Great VCs understand the market they are investing in and know how to identify trends early. They are naturally curious and always try to find the next big thing. VCs look for companies that have a clear and compelling value proposition. They want a strong proof of concept or minimum viable product and convincing market research. They also need to have a vision for where they believe the brand could be in 10 years.
Great Communication Skills
VCs spend a lot of time vetting the management team. They will throw difficult questions their way and even organize whiteboard sessions to see how the team works together. A VC will also look for how well a CEO presents. Explaining and demonstrating your company’s business plan clearly and concisely will be a significant plus for you. VCs will be looking to understand how you will scale and generate revenue. Technical expertise is also essential. You should be able to understand technology trends and anticipate future market disruptions. A solid network will also help source deals and access valuable resources. You can strengthen your networking skills by attending industry conferences and joining professional associations.
When VCs decide on investments, they are often most concerned with the people behind the startup. Opinions on markets and technology are mainly immutable, but people can change. VCs want to see a solid team with expertise in management, technology, product, marketing, and sales. If there are knowledge gaps, the team must have a plan for how to fill them. VCs also want to ensure that their team has good business sense and can clearly articulate how the company will grow. They will also look for a clear differentiator that sets the startup apart from competitors and explains why people choose their product over others.
Great Business Model
A great business model is one of the most essential qualities venture capitalists look for in a startup. They want to see that you have a well-thought-out plan for how your product will grow, the market potential, and how investors will get a return on their investment. They also want to know if there is a need for your product and how it will be different from the competition. VC firms also look at how you handle questions about future changes in the industry or economy and whether you can adjust accordingly. Lastly, VCs look at your team and how they will adapt to changing circumstances. They want to see a team that can tackle unique challenges and make your company’s growth easy.