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Investors Guide for Startup Funding
Posted by Aman Jaith on March 12, 2021 at 1:08 pmWhat do investors look for before funding a startup?
Ansh Godarey replied 2 years, 10 months ago 5 Members · 10 Replies -
10 Replies
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Hi @Aman16 , here are the 4 key investors criteria for funding a startup:
1) Team
2) Product
3) Size of Market
4) The valuation
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Hello @Aman16
There’s a reason behind why startups are called startups. These types of companies have scalable characteristics and a flexible business model that can reach heights.
Its important to understand that Investors want to make money and that’s why they are investing their money in risky startups. So they would be highly interested in your companies valuation and what growth you provide in a time span of 5-10 years.
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True @Abhishek ! I always read articles about entrepreneurs complaining of inadequate capital in the startup market, citing the investors are not putting in money in their startups.
I believe that may be the case in some situations, but I also interacted with some VCs and business angels and they gave a different reason: “Startup founders don’t understand that our goal is to make money and that not every single startup needs or should receive external funding”
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That’s something insightful. I will process a estimated future sales report of my startup! Thanks for your suggestion @Abhishek .
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What is a good ROI for a startup?
Any accurate answers will be appreciated.
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Hey @Ansh ,
To be precise large companies might enjoy great success with an ROI of 10% or even less. Small business owners usually have to take more risk, so I assume small companies should look for an ROI between 15 to 30 per cent
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Thank you for your reply @Kalyani ! Can you also tell me what’s the fair percentage for an investor in the companies shares?
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Logically speaking, Angel investors want 20-25% return on the money they invest in your company. Whereas, venture capitalists make take even more. If your product is still under development, and investor may demand 40% of the business citing higher risk taking.
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