What Venture Capitalists Look For Before Investing

Tip 1 - Investors fear: investing in startups that fizzle, and fear of missing out on NBT

Investors fear: investing in startups that fizzle, and fear of missing out on NBT (Next Big Thing).

By Paul Graham:  The ultimate source of the forces acting on you are the forces acting on investors. Investors are pinched between two kinds of fear: fear of investing in startups that fizzle, and fear of missing out on startups that take off. The cause of all this fear is the very thing that makes startups such attractive investments: the successful ones grow very fast. But that fast growth means investors can't wait around. If you wait till a startup is obviously a success, it's too late. To get the really high returns, you have to invest in startups when it's still unclear how they'll do. But that in turn makes investors nervous they're about to invest in a flop. As indeed they often are.

Tip 2 - Mark Suster: Real Leader says and does what others think is wrong

Mark Suster: Real Leader says and does what others think is wrong. Leadership – It’s hard to be a real leader. To do that you need to be saying & doing what most people think is wrong. If you think you’re on to a really big idea and everybody else thinks so, too, then most likely it’s already conventional wisdom and you’re too late. When Steve Jobs decided to open retail Apple stores people thought he was crazy. When he launched the iPad many people were saying, “I don’t get it, it’s just a big iPhone” or similar.

Tip 3 - Fred Wilson: Networked Humans Can Impact The Future

The Way Networked Humans Can Impact The Future. I read a post by Fred Wilson, truth be told, i read all his posts. "What comes next" post, what i gathered from it is: Data is important, Collective data, he calls it Networked Humans is the key to unlocking the future. Get your business to grow base on Networked Humans way and i'm sure you will have a lineup of VC's fighting to invest.

Tip 4 - Richard Harroch: Clear and concise overview of what the company does

At the beginning of an investor pitch, the venture capitalists will want a clear and concise overview of what the company does, why it should be interesting, and why it would eventually lead to a large exit. So, expect that you will need to cover the following:

By: Richard Harroch

Tip 5 - VCs think less risky ideas are, in fact, the most risky

VCs think less risky ideas are, in fact, the most risky. Ken Howery, a cofounder of PayPal and partner of Peter Thiel of the Founders Fund, makes an interesting observation about small and manageable ideas versus big and crazy ideas. Small and seemingly less risky ideas have very low barriers to entry and very little room for failure, but they also have a low upside potential. By contrast, big ideas have lots of room for failure and experimentation, but, since most people are risk averse, very little competition. Tesla Motors and SpaceX founder Elon Musk is a great example of dreaming big and bold. He believes that the human race may screw up this planet one day to the point that access to another planet will be necessary. The result: SpaceX, the first commercial company to successfully visit the International Space Station. Since a small idea requires the same effort level as a big idea, why ...

Tarang and Sheetal Shah 

Tip 6 - Chris Dixon: Hardware startups are alive an healthy

Chris Dixon: Hardware startups are alive an healthy.  For a long time, entrepreneurs and investors shied away from hardware. This seems to be changing.  It also doesn’t hurt that the most valuable company in the world (Apple) and some of the most exciting startups (e.g., Nest, Jawbone, Leap Motion) make hardware.

If you are thinking of doing a hardware startup, here are a few things to keep in mind:

By Chris Dixon

Tip 7 - startup’s market potential is what investors look for

A startup’s market potential defines the total sales that the startup can eventually make. Market potential depends on three individual parameters: market need, market size and market penetrability. Market need describes the problem the startup intends to solve. The higher the need, the higher the probability that the startup will generate sales. Market size describes the quantity/size of the sales opportunities for the solution that the startup offers. A bigger market can allow the startup to generate higher revenue. Finally, market penetrability refers to how easy it is to make sales and generate revenue. In other words, market penetrability refers to the marketing efforts that the startup needs to exert before it ....By 
Pradeep Tumati

Tip 8 - People Invest In People, Good Team and Scalabe Idea

asking VCs what they look for when considering an investment. In fact, Adam Lilling, founder and managing partner at Plus Capital and co-founder of Launchpad LA, and Joy Marcus, managing director at Gotham Ventures, both corroborated as much when I asked them that very same question.

So let’s say the startup has the right team with the right experience and know-how in place, then what? Then it becomes a question of the idea at the center of the startup and the opportunity for that idea to be successful. For VCs, it becomes a question of scale....

By Sahil Patel

Tip 9 - Michael Moritz: Data Factory Revolution Is Here

Michael Moritz, the legendary venture capitalist at Sequoia Capital, says the “data factory” revolution is here. This massive change in computing and technology is global, not U.S.-centered, and not everyone will benefit the same. Moritz, who famously invested in Google GOOG +0.74% and Yahoo YHOO +0.27% among others, spoke at the TechCrunch Disrupt conference Monday in San Francisco. http://www.forbes.com/sites/tomiogeron/2013/09/09/sequoia-capitals-michael-moritz-the-data-factory-changes-everything/

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