Full access to Entrepreneur for $5
Subscribe

3 Things VCs Are Looking For

By
This story appears in the June 2015 issue of Entrepreneur. Subscribe »

People are often surprised when I respond to their pitch with glowing remarks on the idea, only to tell them there’s no way it’ll get venture capital funding. I go on to explain that VCs want to see potential for the classic hockey-stick growth curve before they make an early-stage investment. Here’s what they’re looking at.

Shutterstock

Market size. Venture-backed businesses need to create or be a part of massive addressable markets—think, the entire world or at least $1 billion in lifetime revenue. Addressable is the key word, and here’s what I mean by it: Your favorite local burrito joint with lines out the door may be making money, but it’s not addressing the total global market for beans, rice and tortillas. This is the biggest kind of nonstarter for sophisticated VCs.

Continue reading this article -- and everything on Entrepreneur!

Become a member to get unlimited access and support the voices you want to hear more from. Get full access to Entrepreneur for just $5!