Turnstone Blog, 2/11/15
To get investment from venture capitalists, your company has to measure up—and the standards are high. Does your company have what it takes?
Here are 10 ways to stand out and catch a venture capitalist’s eye:
Your target market is $1 billion or more.
Mona Bijoor, of JOOR, raised $20.5 million by making a match between brands and retailers in the billion luxury fashion market.
That’s what VCs want, at least a $1 billion market, said Kathleen Utecht, Venture Partner at Core Innovation Capital,which invests in financial products that save people time and money, create upward mobility, and scale broadly. Her job is to identify investment opportunities and check them out. If your market is less than that magic billion-dollar mark, you want an angel, not a VC.
Your product fills a real need.
A huge market isn’t enough. You have to have a product or service that can become a must-have for a big part of that market. If your product or service addresses a major pain point in an industry, VCs may be interested. But it needs to be a major pain—like one that can generate $100 million for your company. That takes innovation and market disruptions.
You can make a stellar return on investment.
VCs want companies that will grow and grow and grow…until its time to leave through an IPO, a merger or another exit strategy. VCs aren’t interested in lifestyle businesses, even if they happen to have the potential to bring in $10 million in annual sales. VCs want a high-return exit, one way or another, according to Renee Park, who is an associate at High Peaks Venture Partners, which invests in vertical SAAS and ecommerce companies.