A Refresher on What Investors are Looking For in a Startup

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I had great fun attending TechBUZ2015 produced by MAVA and hosted by the AOL Fishbowl Labs. The program featured companies at the Fishbowl, there were table tops for discussion, presentations by each of the companies and investor feedback. I saw the first half of the program and here are the walk-aways discussed by Rob Rosenbaum of TEDCO, John Backus of NAV.VC, and Drew Drake focused on strategic investments & partnerships for SAP NS2.

We want to see:
– Get live and get numbers. Data feeds the mind of investors who want to see viability.
– Minimum viable product for testing is the way to go.
– Problem solve a real problem and prove that you are.
– Show that you know the current state of practice in your target area, what are the limitations and how you solve for them.
– Like when it is a large, easily identifiable market; a compelling solution; and in a clear growth area.
– Have a strong team and give information about the people.
– Having recognized advisors and investors involved can help investors get comfortable with you faster because someone else has done the vetting.
– Have a clear, concise message and pitch that shows traction.
– Be honest about the issues. Articulate the challenges clearly and how you plan to overcome them.
– Know the sales process and be realistic in terms of who, what, how long and how much.
– Do your research and come in with a clear story of why you for them and why them for you. What will be achieved for both of you if you work together. This is true particularly for strategic investors.

What areas are hot for investment:
– EdTech offers great opportunity, but know how to sell to it (go directly to the students)
– Healthcare – growing to be 1/5 of the US.S. economy, it’s messed up and a big shift is happening with the decoupling of healthcare from employment. As a result, people are increasingly taking care of their own health. Opportunities lie here.
– Cyber security – there is great technology coming out of the government that is commercializable

And the final word advice:
Rob – Accept failure. Pivot and keep going.
John – Take the Nike motto and “Just Do It!” And keep your current job while you build and show you have paying customers
Drew – Pick your partners carefully

by Limor Schafman

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