Updated: Dec 5, 2022
In this article, we will look at Investors Focus on Evaluation and Decision-Making criterion for Early Sage Startups.
Depending on a different stage of startup lifecycle, investors will consider different criteria when evaluating the company:
Seed Stage - the team is extremely important, as it shows the ability to deliver the project or an idea into reality. Seed-stage investors will look for experience and dedication from the startup team.
1) Founding Team 60%
2) Market Opportunity 35%
3) Business 5%
Angel Funding - the proof of concept and market opportunity are key for angel investors. As they usually come into early stages, they want to make sure the company has a potential to grow, and importantly, secure additional rounds of funding.
1) Market Opportunity 50%
2) Founding Team 35%
3) Business 15%
Series A Funding - the later stage investors will look for the track record, the ability of startup to generate revenues and create a solid customer base.
1) Business 60%
2) Market Opportunity 30%
3) Founding Team 10%
No matter what stage your startup is at, there exist a number of important factors to take into account, which can influence the investor decision:
Compelling Value Proposition: Startup's must have an idea that shows a deep
Understanding of an issue and offers a unique solution.
Solid Team: Even if you have a great idea, a weak team shows investors that you don’t
Have the support to succeed.
Market Opportunity: Don't chase crowded markets.
Technology: You need to be able to show investors that you can stay ahead of the
Technology curve whether through partnerships or talent.
Competitive Edge: Convince investors that you had an "unfair" advantage over your competitors.
Financial Projections: Tell your story in numbers to show investors that you understand
The economics behind your business.
Traction: Can you show investors good evidence that you will have paying customers?
Are you able to back up all of the above points? You are ready to meet investors and start the valuation process for your business.