Five significant Factors Venture Capitalists look at Before Investing

Raising capital for the business is one of the biggest challenges that many entrepreneurs face. Many seek guidance from the financial advisors; many prefer to take loans while many hunts for the venture capitalist.

Venture Capitalist provides capital to the companies, especially those who have high growth potential but they demand equity stake in exchange for the capital.

A successful venture capitalist, Chris Kape and his team at JAMCO continue to consult with and maintain equity positions with a range of firms operating in his areas of expertise. Chris Kape helped many startups to raise funds and he cautious the new business owners to take money from family and friends, no matter how easy they are to approach.

How passionate is the team:

The venture capitalist will probe the organization and its team deeply. Are they really interested to take the business at the next level? If yes, then how capable is the team? Do they have the required skill-set, appropriate experience, and the right temperament to nurture the business?

Apart from this, they also go deep to find how well they can execute the plan, and what is their goal in the coming future, will they like to scale the number of employees?

The business owner has a better understanding of the finances:

Venture capitalist prefers to work with the entrepreneur who has a better knowledge of the finances and the key metrics of the business. They know where they are spending the money and what is their aim to spend it?

A venture capitalist will focus on the sales funnel, what would be the image of the organization in near future, and how hard the entrepreneur is working for better revenue growth.

How is the market opportunity?

Usually, the investor goes for the company that focuses on the bigger picture and really wants to stand out of the crowd. Why customers or any investor would admire any business if they have the traditional approach and do not inject fresh ideas in the product or services.

Investors will want to know, the business strategy to capture the market, and what’s their product all about.

How much risk is involved?

Every business has some level of potential risk but what matters is how well an entrepreneur is prepared to mitigate the risk?  What plans and strategy they have to deal with it?

Startup businesses are more vulnerable to risks like technological, market, product, sales, and legal. So, the investor has to be very cautious before investing in any organization.

What technology they are using?

Technology has a great impact on the business. Are the organization using the latest technology or depends on the outdated one.

The investor will look at how it is unique from other companies, what competitive advantage it has on the business, and does it have the dormant importance in the future?