6 factors that’ll make it easier to raise funding from VCs

Photo credit: Pixabay .

It’s the classic chicken-and-egg problem entrepreneurs face. There’s a great idea on the table and you’re convinced of its viability. Or you’ve noticed a particular business exploding in a market similar to yours and you’re desperate to adopt the model. The only issue is you need investment to get the product up and running, to acquire customers, and to build a team.

There’s no real shortage of VC funds out there – investments in Asia doubled for the first half of 2016 – but how do you convince an investor to take a bet on you?

We spoke with Shaun Di Gregorio of Frontier Digital Ventures, Yanai Oron of Vertex Ventures, and Eden Shochat of Aleph VC to get a perspective on the traits VCs look for before deciding to invest in a company. Here are six factors they outlined:

1. Focus on solving problems

For Eden, the problem a startup is trying to solve is the “most important part of an investment pitch.” If there’s a company addressing a grossly inefficient market, with obvious consumer distress, it’s likely that his firm will take a closer look.

Yanai has a similar view. He explains his fund is willing to splash the cash for ideas that aren’t even displaying much traction as long as the partners believe in the startup’s team and the problem they’re trying to solve.

He takes the examples of Innoviz and E8 Storage to outline how investments were made in companies at a pre-traction stage based solely on the team’s ability to deliver.

Photo credit: Benjamin Child

2. Build a great team

Shaun, Yanai, and Eden all hone in on the premise that investors need to believe in and trust the founding team before they make a firm commitment to extend a funding offer.

“Partnering with the entrepreneur is one of the most important elements of what we do,” says Shaun.

Yanai believes it’s critical to have two or more co-founders. Not only will this augment existing skillsets, it’ll also ensure there’s a steadier ship for the “rollercoaster ride ahead.”

Assemble a well-rounded team and focus on your startup, advises Eden. Funding is secondary.

3. Understand the market

There’s immense value in startups that have demonstrable knowledge of the dynamics of their market, affirms Yanai. This could either be through previous experience in the same industry or via painstaking research and a well thought-out business plan.

4. Timing

5. Display product-market fit

6. Talk to several investors