By Neviya Laishram
When it comes to starting a new company, the term 'Growth' is the top concern for every entrepreneur. Keeping in mind the end goal to create and append a room in the gigantic business sector, every startup entrepreneur is developing an unsurpassed and most satisfactory business model. However, the multi-billion dollar thoughts, model and strategies to become a successful entrepreneur are inclined to fall speedily without the funds because after all, entrepreneurs need venture capital firms in order to secure and get their startups off the ground.
On the other hand, raising money from the venture capital firm is not an easy process as sometimes it turns out to be the most nerve-racking part for startups. Thus, a startup entrepreneur must perceive this key metric to attract Venture Capitals.
Powerful Management Team:
Gone are the days when a company was created on one shoulder. These days, VCs favour shared responsibility and look upon CEOs to define the vision of the company and journey to each and every milestone on the way through delegating tasks to colleagues accordingly. In fact, in this scalable market, investors aren’t going to be willing to bet on your company if you don’t have a strong core team. Hence, having a powerful management team can attract Venture Capitals.
Business Ideas and Models:
If you plan to run a fruitful business in this giant market, then build a rational marketable strategy with unique ideas. Develop a solid business plan that exposes every step and also provides an unmistakable guide to future success that is imperative as VCs usually chew over the company’s business plan in order to pick the right company for investment. For example: It is significant for an e-Commerce startup to have justifiable business ideas and models in order to keep up their Daily Active Users and number of transactions on daily basis in order to grab VCs.
In order to scrutinize how flexible the startup is, these days the Venture Capital firms bestow a lot more attention towards the startup failures. Thus, domain expertise in industry plays a vital role to cart VCs. Amit Vora, Founder, icrushiflush.com says, “Our great strength in mobile ecosystem has helped us create a product which is ridiculously simple to use on almost every handset, including 2G networks. Let’s face it, India is still a 2.5G nation and if you want to acquire millions, it has to be from Tier2 and Tier3 cities which still have feeble networks”.
Pranay Agarwal, Founder, Cubito, says, “Domain expertise is a key factor. However, domain experience can be a difference between a concept and market execution of the same while matching the customer expectations. Hence, VCs pay a significant time talking about industry and more often than not an industry veteran/expert would be sitting on the other side of the table”.
Sanjiv Singhal, CEO, Scripbox says, “While startups can be a dynamic environment to work at with new possibilities opening up almost every day, domain expertise about your core idea is a must have to convince investors about your vision and the innovation you are going to bring about. I’d like to think that it might be quite difficult to come up with a disruptive/innovative idea in a particular domain without having some level of expertise. After all, only when you know how something works, you can make it better. VCs’ definitely rate domain experts higher, but you should balance the skills and know-how your team brings to the table”.
In fact, every startup entrepreneur is focusing on factors that contribute most to the growth of the startup. However, entrepreneurs often fail to notice that dynamism in new businesses can impede productivity and prioritization, particularly when you have asset, time and cash constraints. Hence, an entrepreneur should be open and flexible to adopt a multi-faceted work approach and lead from the front.
Validation is certainly one of the most important factors to attract VCs as the more reliability and customer grip you have, the more likely investors will be intrigued. To raise venture funding, you need an outstanding status in terms of solution, customers, development partner,advisory/consultative board, beta customers to whom investors can speak and many more.
Since VCs are looking to help startup companies to get better returns for their investors, any metric related to speed and volume are important indicators – market potential, audience reach, adoption/conversion rates and repeat behaviour are important metrics. The frequency of usage and the lifetime value of a customer are also significant numbers to look at. On the other hand, global usability with further scope of innovation and market penetration is an undoubtedly one of the factors influencing investors as venture capital firms are focused on businesses that gain a competitive edge and generate rapid growth through technological and other advantages.
CEO’s Role & Responsibility:
Investors are truly cultured and extremely accurate about their goal when it comes to startup space. Thus, an entrepreneur must have an ability to demonstrate and capability to proof them that his/her business is diverse and as a founder, he/she is exceptional and superior in terms of all.
Pranay Agarwal, Founder, Cubito says, “At least till the venture is in a paced scale up phase, a CEO/founder needs to know not just about their core genre but every other vertical of the company as well. The sooner the better, given this the founders’ belief in the idea and scope is the basis of every conversation that belief translates into confidence while pitching. Drafting the story with every nook and corner of the story, making sense and keeping sense to what to pitch and what can you prove”.