Venture capital funding climbed to a decade high in 2017. Your startup’s current chances of attracting VC funding are higher at this moment right now than they have ever been. Despite the excess funding, the process isn’t simple, and investors are more critical now more than ever before.
We found two of the biggest items on every venture capitalist’s checklist. Every startup that has been successful has these two main components.
One, showing a successful management team with a proven track record of success, and two, having a product with common sense utility.
Your management team is more important than utility. Everything from LinkedIn headshots, short bios, CVs, to your team’s work experience- anything can usurp a potential investor’s desire to fund your company.
As a founder, you need to invest in people that have worked at companies that investors can recognize. Also, having two or more founders increases your chances of receiving VC funding by 30%.
This means that collaboration and having more employees has been shown to improve your chances of getting funding. VCs have a tendency to fund companies with a higher number of employees compared to a lower number of employees.
Set up your company so that it can run like a well-oiled machine. Place motivated, experienced people that you believe in into situations you know they will excel at. Look for proven track records of success, as VCs will look for this on everyone’s resume. Give employees general directions and then lots of space so that they feel ownership within their role, and then let them run loose, driving the company forward with their career-driven empowerment. But make sure people who work for you know they are needed and crucial to the company’s success.
The biggest reason behind why startups fail is because the team wasn’t right. This is the most significant contributing factor as to whether or not you will receive VC funding.
According to Statista, your business model and products are tied for the 6th reason why your startup will fail. Hence, spend money and your resources on attracting the top talent who can understand, sell, and expand your products and business model. Anchor the faces with the experience over everything.
Remember that a good sales team in the right market can sell libations to the buddah, but the best product cannot sell itself without the right person behind it. Does the product have a clear and immediate use that seems intuitive? Investors will often ask themselves the question, how practical are the products that comprise this company’s portfolio? Every single one of your products should not leave any ‘ifs’ in the investors mind.
Market your products in a way that shows how and why they deserve funding. Include telling stories and include authentic data. Use visuals to explain some of the more lengthy, abstract topics. Show the investor, don’t just tell them.
And show them with the right people.