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These are the six qualities investors look for during a startup’s investment pitch

Investors are looking for a good startup team, not a good startup idea. These six skills and qualities will get you the funding that you need to turn your vision into reality.

A good idea is no guarantee that your business venture will be a success. It will certainly get you noticed. However, without the perfect blend of desire, passion and determination to impress, it is unlikely that your vision will make it to the market.

In fact, investors are most likely to judge startups on the people behind it. That isn’t even to say that experience or know-how comes into it. Uber wasn’t started by a taxi driver and AirBnb wasn’t made by a hotel manager. Instead, investors are looking for people that can cope with setbacks and give their new venture their all.

According to Worth Capital CEO Matthew Cushen, founder(s) personality accounts for 30% of a VC’s final decision.

startup team - Compelo

Skills and qualities that investors look for in a startup team

Seeking investment is no easy task. You are likely to experience multiple setbacks and rejections along the way. However, to make the process slightly easier, Cushen has offered an insight into the key traits and skills that investors look for in a startup team during pitches.

1. Business knowledge (not necessarily industry knowledge)

A clear understanding of the industry that the company will be entering into is vital. However, experience in the startup’s chosen field isn’t valued as highly as a solid understanding of how to build and maintain a business.

While direct experience isn’t required, VCs want pitchers to display the skills that will help them to fix problems that are likely to arise and grow the company’s user base.

“For example, when building a new food or beverage brand, there are three aspects of the business that are critical,” Cushen explained. “Developing a product people will love and want to buy repeatedly; being able to create and nurture a compelling brand and being able to sell into retailers and distributors.”

2. Willingness to listen, learn and adapt

YouTube was once a video dating site and Coca-Cola was falsely advertised as medicine. Had they failed to listen to their customers, learn from their mistakes and adapt to changes in the market, they wouldn’t be the multi-billion dollar companies that they are today.

Investors will be putting huge amounts of money into your company. Therefore, they want to know that it is in the hands of somebody that is willing to listen to their ideas and input.

Startup team - Compelo

VCs have seen many companies just like yours crumble. They know the ins-and-outs of business, what works, what doesn’t and when it’s time to make a change. If you’re unwilling to take their advice, chances are your company won’t go very far.

“Myself and my partner Paul have been investing for years, have lots of brand, marketing, retail and innovation experience and are just about arrogant enough to believe our opinion might be useful for a new business,” Cushen explained. “So it’s disappointing if a team is not up for listening to our perspective.”

3. Passion for your product

If you and your team aren’t excited by your startup idea, chances are nobody else will be either. That includes those investing in your company, even if your idea is a good one.

“Passion is an overused term, but it is hard to get excited about an investment if the founder doesn’t have it,” Cushen admitted.

Loving what you do is vital to achieving success. If you don’t have passion for your chosen industry, you are more likely to give up on your new business at the first sign of hardship or decline.

Likewise, the wise investor believes that it is important for entrepreneurs to find an idea by doing what they love, rather than looking for a money-making idea, or else they will struggle to find the passion and hunger to make it a success.

4. The ability to communicate effectively

It is important that a startup team can communicate well, in order to ensure that all areas of the business are working together to ensure that the product is as good as it can be.

Startup team - Compelo

Likewise, as a startup founder, you must be a champion talker. You will become your company’s salesperson. It will be on you to convince everyone from investors to customers that they should buy your product, use your service or download your app. If you can’t excite consumers, the user base won’t come.

“A pre-requisite for any entrepreneur is to be able to articulate clearly and excite people,” Cushen explained. “Whether this is their proposition to customers or a clear strategy, priorities and decisions for a team.”

An inability to articulate your ideas clearly could be the difference between success and failure. That is particularly the case when you’re looking for money. Investors won’t invest if you’re unable to explain what your company is and does, or why and how you will spend their money.

5. An awareness of your weaknesses

No business is perfect, especially not during its startup years. With few employees and little experience of the market you’re moving into, your startup team is likely riddled with a lack of important skills and expertise. Investors know this.

Rather than trying to hide these deficiencies, investors prefer you to be open and honest about your weaknesses. This shows that you are self-aware and have already thought about how you will improve the business in the future.

“No individual has fully realised their potential and no founding team covers all the bases. We like to see awareness, openness and honesty about gaps in the team’s experience or expertise and a plan to bridge the gap,” Cushen said.

6. A spark between everyone involved

As previously mentioned, investors largely base their decisions on how much they like the people involved, rather than the idea. Therefore, it is important that there is chemistry between the team and the investors.

You might have the best idea since sliced bread, but if you come across as the kind of person that would be hard to work with, VCs are unlikely to hand over their money.

“Most investors won’t invest in someone where there isn’t an intangible spark of chemistry,” Cushen admitted. “Investors are the ones with the money. They generally don’t have to invest and definitely won’t if they think it is going to be a chore.”

Now that you know what makes the perfect startup team, learn how to take your business to the next level:

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