What are investors looking for in your startup?
As a result of my work, I come across dozens of startups every month that need help raising money
Whether it’s pre-seed, seed or Series A
9 out of 10 startups are not ready for investment and instead of going to raise money, we help them get ready
So, today I’m talking to these 9 countries
We’re going to briefly talk about the things that if you have them, you’ll find an investor looking for you
What are the misconceptions that first-time founders have about investing and we’ll also talk about the things that an investor looks for in a simple, concise and easy way and finally we’ll talk about some simple tips while looking for a fund
What are the things that if you have them, you’ll find an investor looking for you?
Let me be a bit shocking... The investor might not look for you :but there are things that if you have them, the investor will love to hear from you and will love to invest in you
1. If you are growing monthly for example by 30% or more, meaning that the number of non-recovering customers increases month after month by 30% or more for 10 consecutive months, for example, the investor will love this equation and will be excited to learn more.
2. Your co-founder team is exceptional, meaning that you have been a co-founder in startups before, and one of them was acquired via an acquisition or an IPO for example, and this is of course rare in Egypt because the number of exits is more than one hand. From my limited experience, these are the two really influential points that an investor in the early stages is impressed by, in addition to many other points, but they are not as important, and we will mention all the points as well, but you should remain aware that the investment journey is difficult and long. Frustrated
There is nothing you can do to get an investment easily, so you need to be prepared for this journey
The first step to prepare is to correct some misconceptions about investing
- How long does an investment round take?
Founders come to me a lot and want to get a fund quickly because they are running out of cash. Ok, your stage after how long does it tell me? The investment round, if we are talking about the pre-seed and seed stages, from the moment we sit with investors, we do not sign the majority paper within 3 months. If there is one of the investors who does not affect anything in the paper, we will most likely take a little longer than that, but this is not the period that you know. The investment round takes most of the vacation, as he likes. He likes to make you feel more comfortable and make the investment decision while he is reassured. According to my limited experience, he benefits from not knowing you as a co-founder for a while and has not heard about your startup before. He needs at least 9 months or a year to follow up on you. This way, he makes a decision while he is reassured. This way, he can continue with you if you do not require investment, but he gets to know each other and maintain your relationship. Continue with this investor until he gets to know you and follows up on your startup project when Gather it.
- Is it possible to get investment if I don't have traction yet?
This works, but not in Egypt unless you are the super co-founder we talked about above.
Here, there are two things: either you get investment from someone you know or you go to accelerators and incubators.
Of course, there will be exceptions, but I'm talking about the rule
- I want a million dollar seed
Although there are examples that came close to this number in Egypt, but since we are talking about the general rule
This rarely happens except in certain cases, and usually if you are getting investment for the first time, you are far from these cases.
So it makes more sense to start by taking a small number from the angel and then take $100 or $200 thousand for example and the round after that can raise $1 million even after a short period if your numbers are big I mean
What are the things that an investor looks for in your startup?
I was going to explain each point but the post is long for me so I will publish separate posts on the points that need explanation.
But these are the important things that matter to you
- Customer needs
- Large market
- Great team
- Good and scalable idea
- Expert advisors
- Ability to build the product
- Customer waiting list
- Active users
- Customer retention
- Paying customers
- Good unit economics
- Partnerships
- Low acquisition cost
- High customer lifetime value
- Competitive opening
- Network effects
- Defenses
- Rapid growth
Of course, having bullet points without explanation might make a lot of people say they apply to all of me, but before you say that
Either go to Medium and read about each term carefully or wait for my posts to see if they actually apply to you or not
Finally, some quick tips to help you land the investment:
- Focus on the business and the product because that’s what will bring the investment
- Talk to the investor and ask for advice. Don’t ask for the investment first… with the goal of getting them to hear about you and start following you
- Keep in touch with the investor, but without going into details