Everyone wants to know what investors are looking for from a company before they hand over their cash to help the business grow. Yannick Roux, a VC at EC1 Capital, shared his thoughts at dinner last week on what he looks for when deciding on whether to invest or not. He split it into two categories: people and markets.
- Knowledge. What knowledge does the proprietor have? Would I actually be able to help and add vale? Would I want to work for them?
- Inspiration. I want to be excited about the business, and the ability the founder has to inspire people to join them on the journey of building the business and getting people to join.
- Leadership. Are they able to lead the team once it’s in place? And can they lead them to the ultimate goal?
- Investment. Is the founder able to raise money? Can they convince investors to raise money?
- Passion. There has to be a sign of obsession and passion. Passion is critical. It gives the confidence that will get you through the bad times, without it you’ll give up.
- Trust. Ultimately, they need to be trustworthy, and that it’ll be a pleasure to work with them.
- Market size. It’s hard to get right. We’re looking for companies who can make £50m revenue. The company’s projections need to be achievable for their market share.
- Timing. Is the market addressable right now or in the future? Timing is critical as you may have the right team but it can be too early or too late. If you’re too early the business will run out of money, too late and the market may already be too saturated. Getting the timing right is one of the biggest challenges. This is the largest reason for failure.
- Competition. Does the company have a good shot at becoming a market leader? Is there a clear path to making money? Long-term viability is important, as well as cost base. Focus on the next 12 months.
For more tips that our speakers have shared with our diners, take a look here.