5 Things top investors look for from founders

by Startacus Admin

Market knowledge, a great team, and a good product are certainly essential when trying to secure funding. But what else are angel investors looking for from the startup founders who pitch to them?

We spoke to some of London’s leading investors to find out what the most important elements are for a successful pitch.

Here are the five key things top investors look for from founders:

1. Transparency:

“The worst mistake a founder can make when pitching for funding is being opaque about any aspect of their business, however small it may seem,” says Kevin Chong, a former corporate financier at Investec and PwC.

“Good investors do their research and will ask about the true progress of the fundraising, who the competitors are and what your background is. Getting found out for lack of transparency has a lasting negative impact with investors.”

2. Traction:

“Personally I don't go for ideas without traction. Initially I focus on the market, the team and the traction. It’s then and only then I begin to think about the idea,” says Ami Shpiro, founder of Innovation Warehouse, a business accelerator in Farringdon.

“I ask myself: does it come from a very unique and original perspective, and consider whether it is timely, or ahead of its time. Also, how defensible is it against rival products and markets? Can it be patented against anyone who might want to steal your idea?”

3. Read your audience:

“Presenters of all types make the mistake of failing to pay attention to their audience during the pitch. This includes your body language, asking the right questions and replying in an efficient manner,” suggests David Ryan, a serial entrepreneur and investor.

“Remember, a good presentation should be like tasting wines: find what your audience likes, then sell them a case. Some folk just try to spray cheap champagne hoping that is what the audience want, and I can tell you – it isn’t.”

4. No competition:

“Honestly, the worst thing founders can do in a pitch is say that there’s no competition. It really aggravates me, because it implies that either there is no market for what they are pitching, or simply that the founders haven’t done sufficient research, or simply not looked hard enough for the competition,” says Chris Mairs, Founder of Metaswitch Networks.

5. Scalability:

“Imagine ten pitches to angels: statistically for every one or two that make it, all the others will be failures, or with minimal returns at best. So, I look for ideas with the possibility of a very big upside that can be executed and protected,” says David Ryan.

“First, make very sure you have a product that solves a real and painful problem. Easier said than done when starting with limited resources, but I advocate doing as much market research in as deep a way as possible. Imagine how entrepreneurs will feel after giving all their passion and resources to scale, only to discover no one needed your product badly enough in the first place,” suggests Kevin Chong.

Investors see hundreds of pitches throughout the year, so it’s important to be expressive and show your passion for your business.

Nerves can get the better of even the most experienced founders, but as long as you take care to communicate clearly, and give honest answers to their questions, you’ll stand a better chance of getting that all-important investment.

AngelLab is a London-based venture capital firm that invests in exceptional tech entrepreneurs in the UK and Europe. AngelLab’s portfolio includes Adbrain, Seedrs, Move Guides, Azimo and Code Kingdoms. Kevin Chong, David Ryan, Ami Shpiro and Chris Mairs are all Partners at AngelLab.

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Published on: 22nd December 2014