What does a venture capitalist look for?

We had a humbling experience in class today, 4 bright minds burned the midnight oil and churned out an e-business proposal. Though this was a class project and we never had intentions of starting a firm even if an investor was willing to risk his capital. We were surprised by the presence of an accomplished VC during our presentations, who managed to rip our proposal apart..

So my key learnings when trying this out the next time, this is what a VC looks for in a proposal.


The Team

The team will be scrutinized for the following details

• Does the team have experience to handle this venture?
• Are there people from finance, marketing, sales and technology background?
• Does the team have experience in running a profit and loss account in the past?
• If the product is technology intensive, do they the experience or aptitude for the same?

Competitive Advantage

• Is the product/offering differentiated in the marketplace? Are there too many players?
• What is the next best offering from competition, how is ours differentiated, is it easy to imitate?

Market Potential

• There needs to be a significant market size and addressable market. The numbers need to be big and convincing to attract attention from the investor.
• The product/company should be able to scale up to meet the market potential.