What Investors Look For When Evaluating Your Pitch: Mehmet Atici, Investor, Earlybird Digital East Fund
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Before we invest, we're looking for startups that can demonstrate traction. Every smart investor wants to see numbers and will be driven by the momentum created by the founders. Although the satisfying level of traction may differ for different types of investors, the entrepreneur should be able to complement his story with convincing traction.
At Earlybird, we seek to see product-market fit when developing our investment thesis. Whereas a seed/angel investor might be satisfied by just seeing early results from a few number of happy customers. Either way, it is crucial to show your progression and the results you got since you have started your company.
Secondly, mostly referred as the, How big can this get question, opportunity size is one of the crucial factors. Targetable market size should be large enough for VC investors. In order for VC mathematics to work, large funds have to return huge chunks of money to their investors, that means every opportunity they invest in needs to be sizeable enough.
Third is team-including biographies in the deck is a must to demonstrate relevant work experience and education background. Every large company built, without an exception, has amazing people running them. Scaling a small startup into a sizeable business is quite complex and requires high caliber, right skills besides hard work.
Fourth is value proposition, meaning that the investor has to be clear about what you do, which problem you solve, what value you provide and how you make money. Explaining your product at a basic level is sufficient and, in fact, better; if it is interesting enough the investor will always dig deeper.
Finally, we look at the raise amount and use of proceeds. As an entrepreneur, you have to be sure about how much money you want to raise and where you will spend it on. Rather than long-term financial projections, the investor is more interested in 6-12-18-month plans which are naturally more realistic and showing whether key next steps or key hires are already determined.