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4 Traits Venture Capitalists Look For In A Startup

According to the research done by the US bureau of Labor Statistics, nearly 60 percent of all businesses fail within the first four years of operation. This is attributed to a wide variety of shortcomings, hardships and overall struggles faced by any new startup. Unfortunately, there is a great percentage of failure from businesses that had the potential to be successful but were poorly managed or just inexperienced. It is important whether you are a venture capitalist or have a company looking to receive capital funding to know the best traits in a startup.

4 Traits Venture Capitalists Look For In A Startup

#1. Unique Product

Anyone can sell a cup of dirt and call it top-grade soil. If a business isn’t unique and can be easily repeated and sold by others, chances are it will. Venture capitalist should always be looking for the next big product that is sure to get the consumers hyped up. If there is nothing special about the product then there is nothing stopping every average Joe off the street from getting in on the action.

#2. Market Proven

Imagine the most amazing, ingenious, revolutionizing product in the world, coupled with a fantastic marketing plan and sales pitch. That unfortunately doesn’t say a lot if the product has never actually made a sale. According to the Venture Capital Association only .4 percent of new companies in the USA receive capital funding. With such few funds being invested into new businesses it is important for the startup to prove it’s relevance before the money is wasted.

#3. Savvy Founder

When considering a startup to invest into it is important to know exactly whom you are getting into business with. Even if the product is unmatched, a poor businessman can quickly run it into the ground. Some important traits to look for in a founder are as follows:

  • Energy and Passion
  • Industry expertise and creditability
  • Listening and communication skills
  • The ability to comprise and problem solve

Someone like Gabriel Venture Partners – Rick Bolander has led over fifty venture deals into over 100$ millions. What is his secret? Identifying the startups with the strongest founders and working with them for success.

#4. The Perfect Team

Sometimes it just comes down to having the right person for the right job.  If the right person isn’t doing the right job, it can become a huge burden for the entire company. Jim Collins says it best in his book Good to Great, “Widen your definition of ‘right people’ to focus more on the character attributes of the person and less on specialized knowledge. People can learn skills and acquire knowledge, but they cannot learn the essential character traits that make them right for your organization.”

Being a venture capitalist is a risky, sometimes terrifying career. But the reward almost always outweighs the risk involved. The more you research and learn, the more you’ll discover anyone can do it with the right skill set and knowledge backing them up. You may still make some mistakes but that is a small price to pay for a hefty paycheck and distinguished career.

Images: ”Signpost with Venture Capital wording Shutterstock.com

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JT Ripton is a freelance business and marketing writer who enjoys writing to inform and intrigue

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Comments
  • Thanks for another great post JT. As you say being a venture capitalist can be a very risky business but the points you’ve raised make sense to minimise that risk a bit at least. I look forward to your next post

  • I am not a expert on the subject, But Been looking for a answer for a while, that How to value a Business, in eyes of Investors. If you have any great information about this, I would love to read that.. Thanks for the post.. I tick all the boxes above… hope to find some good investors.




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