Do you remember the show “Shark Tank”? The concept of the program was simple: investors and innovators with unique business ideas would take the stage. A presentation, an interesting idea, a well-thought-out business plan — and the investors were ready to invest.
It was a show of its time. That’s how things worked on TV, but what principles apply in the real market when it comes to attracting capital?
How do angel and venture investors work today?
Once upon a time (in the good old days), when angel investors handed out money to anyone who could sell themselves well, a simple conversation over a cup of coffee at Web Summit might have been enough to pique an investor’s interest.
Working with investor assets in various countries, I’ve noticed that times have changed. Today, you need to be prepared for a detailed evaluation:
- your product,
- market potential,
- scalability prospects,
- team and expertise.
Many founders overlook one of the key factors — the team.
And this can become a decisive aspect, especially when it comes to a Pre-seed or Seed round. What are the roles? What is their experience? What have they created? Communication? When there is no traction yet, and the business model is not confirmed, the key question for an angel investor sounds like this: “Do I really believe that these people can execute what they promise? And can I trust them with my money?” After all, people invest in people.
With venture funds, the process is somewhat different. When there is already traction and a proven business model, the evaluation becomes more dependent on numbers. Yes, the team is incredibly important, but the equation now includes more data to forecast future prospects.
So, if you are currently looking for investment, think not only about how cool your product is.
Think about whether you have a team that will make the investor say: “Yes, I believe that you can make this happen.”
Kostiantyn Kazakov
Founder ArtRecruiting