Getting an investor to believe in your idea is quite an uphill task and with the ever-changing market dynamics, the areas an investor look before investing in a startup has also been changing.
Sanjay Enishetty, the founding partner of 50K Ventures, spoke to My Big Plunge about the five things a seed investor looks in a startup before investing in them. Given the enormous number and different kind of startups emerging in the market, there is no loss of options to pick up, says Enishetty.
“We have five parameters we look into before we finalise a startup and consider it for investment. The first is the business model. In it, we see the novelty of the product and service. The second most important thing is the team. The founders, the pedigree, their past history, personal passion and skill set; these things matter the most.”
50K Ventures is a Hyderabad-based investment platform to back technology startups at the idea and early-stage of their lifecycles. They have invested in 14 companies so far, of which 4-5 are mobile companies. They have a total of 65 investors over three cities. The venture invests up to $200, 000 with $100, 000 being the sweet spot.
Enishetty continued, “The third most important would be the overall market acceptance. Sometimes, few products are too early for the market, way ahead of time. Hence, we carefully look into its acceptability. Fourth would be if it could generate sufficient revenue for the company to sustain. It should generate traction so that it grows in terms of users.”
The fifth criterion is surely the last one but seems to be the most important issue from an investor point of view.
“It’s important to foresee if there will be the next level of investment or someone would be interested in acquiring the company. As seed investors we always look for an exit strategy,” added Enishetty.
