2 min read What do investors look for? It’s About Execution and Momentum.
It’s About Execution
Some startups think their business will succeed based on the idea, the technology, the market, or something else.
They think their technology will win the day, or their ideas are so great, or the market is growing so fast that they will succeed based on it.
For the investor, all of these are important but in the end it’s about execution. Execution turns the technology, idea, or market into a winning business.
In your pitch, demonstrate your past execution successes and talk about how you will execute on the idea, how you will execute on your technology and how you will execute to penetrate the market.
Investors determine investments based on the startup’s proven ability to execute.
Traction vs. Momentum
Many investors look for traction in a startup to gauge their progress. Traction declared as a single number on a pitch deck can be hard to judge as sufficient for investment. Many investors tell the startup, “nice traction, but we’d like to see more” Instead of traction look for momentum.
Momentum demonstrates things are continuing to progress and move forward. Sales, team, product, and fundraising are the core four to look at. Investors look at these four because they represent the results of the startup’s work and not that of the market’s progression. Momentum must be shown over time in numerous updates by email, phone, or in person.
It takes four touches before an investor gets a sense that there is momentum and it will continue.
Startups should always have some engagement with customers. This includes alpha testing, beta customers, MVP customers, etc., so they have something to talk about with investors.
For startups pursuing the enterprise sale, show your momentum through the sales funnel with your large customers. It typically follows the model of interest, qualification, trial negotiations, pilot test, full product launch, and ongoing support.
Show how prospects are moving through the funnel and customers are upgrading and expanding seats.
It’s the continuing forward progression that counts.
Read more from TEN Capital: https://tencapital.group/education/
Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group
