Different investors will have different criteria for selection, and could vary by not just the amount of capital they invest but also the stage at which they invest and the kind of companies that they invest in.
We invest in what we like to call ‘two people and a powerpoint’ stage and our decisions are based on the following:
- Quality of the team: This is our most important criterion. We are not looking for experienced entrepreneurs. But we certainly look for understanding of the domain, understanding of business concepts & operations management, and most certainly commitment to the venture.
- Clarity of the concept/idea: How well has the team been able to articulate what they want to do. You cannot pan well what you cannot communicate well.
- Size of the potential: Concepts addressing large markets with large potential are obviously better.
If the above two are positive, then the following few areas would be discussed:
- Scale of aspiration of the team: Does the team have the aspiration and hunger to be a market leader?
- Business case: Is the business case strong enough – remember, when pitching to an investor you are competing not just with direct competition from your domain but also with startups with interesting business plans
- Exit potential: How are we going to get a good return on our investment. I.e. what is the exit option for us.