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What makes a startup fundable?

Is it all a matter of metrics? The background of the founders? The location? I keep asking myself those questions... In your mind, what makes a company fundable and ready to attract a line of investors.

10 Replies

Rachel Kaberon
1
0
Rachel Kaberon Entrepreneur • Advisor
Market Insights and Business Transformation Strategist: FinTech, Collaboration, Process Automation
a fundable company can articulate a market need and demonstrates it has identified a solution that meets those needs and that people value! The background of the founders, contribute to your understanding of one of these legs, the metrics are a way to dimension the size of the opportunity and location pinpoints where either the needs, or your solution depends.
Alan Brody
1
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Alan Brody Entrepreneur
CEO, TECHmarketing, Convean: iBreakfast & Startupalooza
What makes a startup fundable is the presentation of a credible approach to owning a scalable piece of a high growth market. It needs to fire the investors' imagination and you must show you are uniquely qualifed to pull it off. You need to think it out thoroughly and be able to sell it, pull in customers cheaply or offer a fiery kicker that drives people mad with desire for it. Addiction is welcome. In order to pitch, you need to find the hook - or no one will read your book. Anything else is just an academic exercise. Alan Brody www.angelweekny.com Angel Week NY Startupalooza o iBreakfast o eTV World [removed to protect privacy] (914) 723-4464
Irwin Stein
1
0
Irwin Stein Advisor
Very experienced (40 years) corporate,securities and real estate attorney.
Investors want to see a business that, if funded, can succeed. Do you have a product that you can source and sell at a profit? Do you have the right people to get it done? Very few companies attract a line of investors. You have to sell your company to investors and that takes skill as well.
Bryan Brewer
1
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Bryan Brewer Entrepreneur
Startup mentor, educator, and entrepreneur advisor; focus on helping companies raise investor funding.
Here's what I have found in my 15 years of helping startups raise investor funding:

The business plan of a fundable company has enough of the right stuff in five main factors: product viability, business model, market strategy, management, and the deal. If you fall short in one or more of these factors, investors won't take you seriously. To check the fundability of your startup, take myfree Minimum Fundable Companytest atwww.mfctest.com

Then, once you cross this threshold, investors make their decisions based on their belief in your business concept and how likeable and trustworthy you are.
Lonnie Sciambi
3
0
Lonnie Sciambi Advisor
"The Entrepreneur's Yoda"- inspiring, guiding entrepreneurs to achieve their dreams - CEO Mentor/Advisor, Author/Speaker
No matter how deep your team, how cool your pitch or how detailed your business plan, if you haven't got it past proof of concept, it's just an idea. A what's proof of concept? Customers! Customers using and paying (maybe only a fraction of its real price or value, but paying) for your product or service. The only people who fund ideas have the same last name as you!

So, the meaning is clear. First, find real customers. Then, find real investors.
Martin Omansky
1
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Martin Omansky Entrepreneur
Independent Venture Capital & Private Equity Professional
We deal with this issue all the time. Here are our considerations: (1) uniqueness of the product, service, or technology; (2) IP protection; (3) credibility of the progenitors; (3) appropriate business model; (4) size of potential market(s); size of revenues in a few years post-financing; (5) regulatory matters; (6) cash investment by founders; (7) gut feel. Sent from my iPhone
Anubhav Kushwaha
3
0
When was the last time you took charge of building a team from scratch? We are hiring software development leaders
I don't think there is a fixed checklist. A lot of the things mentioned above are part of the "common set of things that investors look for" but a lot of the final checklist depends on the investors themselves. Finding an investor who has the right level of interest and risk appetite for what you are doing is as relevant as having a "fundable product/service".

In my experience - (1) having a product/service with a sizeable true addressable market that has been proven by an early launch or PoC, (2) having positive customer feedback, (3) having the culture and processes to capture and react to customer feedback, (4) a plausible marketing/expansion strategy and (5) Low number of external dependencies to success. These 5 elements help build a story that investors can get. Then you have to find an investor that gets your story. I emphasize on this because there may be a lot of rejections that have nothing to do with your startup and everything to do with what the investor is going through at their end. So please take rejection lightly, be self criticial of your story and keep improving it. You will find an investor if you have a strong, honest and customer vetted belief in your story.





Brendon Whateley
2
0
Founder at Kugadi
The short answer is YES.

Investors have lots of options and want some sort of evidence that the startup has a reasonable(*) chance of success.

* Reasonable -- The balance of the risk vs reward. How likely is it to succeed vs investment amount vs likely payout. This is influenced by who the investor is, the size of the fund and the returns they need. In other words, funds have a range of investment sizes that make sense. If you need either too little money (won't give a big enough return to make a difference) or too much (they don't want to bet the farm on you) then it doesn't really matter.

In other words, you need to offer an investment size and return potential that matches the investor. And in addition you need to provide them with enough confidence that you are the team who can succeed in executing. Track record offers confidence in the team. Current progress at reducing risk and showing progress, or even better tractionis another. In the end, it comes down to the investor having enough confidence against the risk.
Peter Baltaxe
1
0
Peter Baltaxe Entrepreneur • Advisor
Consultant, product leader, serial entrepreneur
I just gave a talk at Galvanize Seattle on this. Here is the list I discussed:
  • Great team (domain experience, complete team, prior startup experience a plus)
  • Clearly differentiated value proposition (much better than competitive offerings, ideally a pain killer rather than a vitamin)
  • Big market
  • Solid business model (good margins, ability to acquire customers at a fraction of their lifetime value)
  • Defensible advantage
  • Customer traction (Paying customers. This is in my opinion the most important factor)
I would add that you have to be realistic in your valuation ask. Look for local investors who have an interest in your domain.
Valeriia Timokhina
1
0
Valeriia Timokhina Entrepreneur
Eastern Peak Software: Custom software development
The product must meet market needs. It has to solve someone's problem. In fact, someone's - is not one or two persons but a large group of people which are willing to pay for your solution. We have considered this issue recently in the article:
It is also important to mention, that you'll have to prove to investors that your business project is worth funding. How to do this? Build a workingprototype of your idea - MVP. MVP is already a small achievement and will help to attract investors.
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