Funding — one of the most confusing parts of every entrepreneur’s journey. From asking friends and family to looking for seed capital to a solid venture-backed funding round, it’s hard to know where exactly you sit in the queue and who you’re supposed to go to for the money you need. What’s more, investors and firms often don’t publicize exactly what they’re looking for, so how do you know where to spend your time?
We’ve rounded up some straight answers, from product stage to team structure, on what top investors across the board really want to see.
Techstars is a worldwide network that helps entrepreneurs succeed. Techstars Ventures manages $265M out of three funds and co-invests in Techstars accelerator and alumni companies. Techstars Atlanta is currently on its second cohort.
“At Techstars we famously look for 6 attributes in our startups — team, team, team, market, idea and progress. But if I had to boil it down to one key element, I think for me it would be a combination of team and progress — let’s call it “speed.” I get excited when I meet thoughtful founders that tirelessly run at a breakneck pace,” says Techstars Atlanta Managing Director Michael Cohn.
500 Startups is a global venture capital seed fund headquartered in Silicon Valley; they currently manage over $390M across 4 main funds and 13 micro funds. They have invested in over 1,800 startups.
At an event in Atlanta, 500 Startups Venture Partner Monique Woodard described what she is looking for in her forthcoming multicultural-focused micro-fund, 500 Shades. 500 Shades will be a seed and Series A fund focused on black and Latinx entrepreneurs whose businesses address the increasingly-diverse U.S. population in a new way, or that take advantage of their cultural background to be relevant and innovative.
So what is Woodard looking for? She wants to see what she describes as a “fully-baked” team, with at least one technical team member who is able to “actually execute on the product”. That product doesn’t have to be in its final stage — Woodard says she would even consider startups in a Beta stage — but should already be able to identify the target market, have some traction (users and/or revenue), and a product-market fit.
Where is she looking? Woodard is adamant that she is committed to exploring deals outside the Valley, even outside the West coast. She highlighted a number of cities around the country where she intends to search for deals, Atlanta and Raleigh-Durham among them. These cities, Woodard says, have a significant number of high-potential multicultural founders that aren’t being supported by the existing ecosystem.
“The three things I talk about is: the team, the stream, and ‘not a meme’,” says Cummings. “The team is the entrepreneurs who are hungry and ambitious and resourceful, all the things that people talk about that are critical to get stuff done. The stream idea is to think of a fast stream, with lots of disruption taking place. From a company point of view, there needs to be market disruption, something new, changing, something that makes it open for new opportunities.
Then the final qualifier is ‘not a meme.’ Memes are funny, silly, but with a short lifespan. There was a Chuck Norris meme that I thought was funny that said ‘Chuck Norris is the only person who can eat Chick-Fil-A on Sunday’. Memes can be witty and clever, but they are a nice-to-have. So the ‘not a meme’ idea means to pursue something that isn’t short-lived; it fundamentally makes things better. It’s proven, it’s measurable and sustainable.”
Mosley Ventures is a venture capital fund that invests in early-stage technology companies in the Southeast.
“It is essential they have experience in the market they are tackling. I gravitate toward entrepreneurs who have authentic stories where their passion drove them to create their startup. When the vision of your startup is drawn from your personal experience, the investors get the chance to have a deeper connection with you,” says Mosley Ventures partner Wei-Chun Tai.
“I have a good working relationship with all my CEOs so I expect the entrepreneurs pitching to me to be genuine about who they are. I believe that taking our investment is less about the money, but more about partnering with us to create value.”
Canal Partners is a private equity fund that invests in smaller companies looking to scale with a $1-$3M investment.
“It comes down to making sure we have the right founder, the right team, and a product. We call this technical debt — the product usually has some technical debt on it because they don’t have capital. We look for a product that we think can scale and really grow into that market,” says Partner Todd Belfer.