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When Should A Startup Approach An Investor

Entrepreneur vs Investor

The unfortunate fact is that though being in the business of risk investments, most VC’s and Angel investors in India are highly risk-averse. This is why start-ups in India struggle to get off the ground. Past experience has made investors extremely careful with their investment decisions and despite such extreme caution, they still end up with a dismal success rate of less than 20%. So I guess that makes them even more cautious.

So what will make an investor take that leap of faith with your venture? Put yourself in the shoes of the investor and critically appraise your venture and decide if you will invest money in the venture. It would help to give you a different perspective and help you plan accordingly.

So when do you know you are ready to approach an investor?

Any investor will want to know if your venture will help him get good returns and in how much time. To be able to give some reasonable answers to these reasonable questions, the venture should be able to clearly demonstrate its ability to help the investor take a considered decision.


Take this Quiz to know whether you are ready to approach an investor

If you have reasonably good answers to the above set of typical concerns that any investor would have, then I guess you are ready to go looking for investment with reasonable chances of success. Ofcourse, if you also have a set of paying customers who are willing to stand up and talk for your product, then the chances of success are even better.

Moreover, if you actually have a unique product with a set of USP’s that makes yours a ‘me-only’ product and/or if your product or some part of what your product does is patentable because of its uniqueness, then investors would not mind overlooking some of the factors mentioned above. But please remember, just because your product is me-only or patentable it does not necessarily mean you will have a paying customer. I have seen some of these patentable or patent-pending products remain just ‘good-to-have’ and struggling to find a paying customer. However unique, it still has to demonstrate clear ROI before the customer digs into his pocket.

In most cases, I have found that the entrepreneur does not have answers to most of these concerns and therefore, the difficulty in getting investments. The investor is willing to invest. You only have to give him the confidence that his investment will perform for him the way it is expected to.

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ABOUT THE AUTHOR

The author, Srikanth Vasuraj, is a Business Consultant focused on helping start-ups to grow.  Srikanth’s Advisor Profile can be found here

He can be reached at +91-98454 78585 or srikanth@nodiva.co.in. Please visit www.nodiva.co.in for more information.

Srikanth has worked with Ducont.com, Dubai, Sigma Interior, Bangalore (providing office and residence interior fit-out services), Appnomic Systems(developed their Sales and Marketing teams)Simbus Technologies,(helped them in their Go-to-market, sales and marketing strategies)

Srikanth is also a mentor and advisor to HealthMacro Technologies, Bangalore and Screen Magic Mobile Media, Pune

Past articles by Srikanth: Click here.

 

Summary
Article Name
When Should A Startup Approach Investor
Author
Description
When is the right time to approach an investor? Put yourself in the shoes of the investor and decide if you will invest your own money in the venture.

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