Startups and Funding

The startup I have been assisting finds itself in a bit of a tight corner financially. On one hand, we don't have enough money to expand our team because we only have a few small projects in the pipeline. On the other hand, we can't get bigger projects till we expand our team, in terms of both headcount and skill sets. Despite all our efforts, we haven't been able to attract any VCs or angel investors. So I asked myself - what is it than an investor looks for in a startup?

First and foremost is a business plan. A good business plan shows your would-be investors the company's potential and convinces them to invest their hard-earned cash in a startup. It tells them what you would provide your target audience that is different from the offerings already in the market, attracting customers  towards your firm and growing its market share. After all, why would an investor put money into a company that doesn't promise good returns

Next comes a good core team. An entrepreneur (or set of partners) may have a great idea, which has the potential to be the next Facebook or Twitter. But do they have the right mix of skills to develop the idea and start earning money? If they have a good set of people to start off with, they may be able to gradually build a strong and successful organization around it. The core team should cover all aspects of the business, from technical work to management

Last but not the least, the entrepreneur must be clear about his goal and must remain focused on it. It is easy to get swayed by trends and deviate from your business plan. For instance, jumping on to a bandwagon like Android apps just because everyone else is doing it (just an example, no offence intended to Google). Angel investors especially would be very attentive to this aspect, since they generally remain invested for longer than Banks or VC firms

Today India has many firms that provide both capital and business advice to startups, especially those in the IT and telecom sectors. Any one with a business plan that leverages the power of the Internet, but in a way that is different from the competition, has a good shot at getting funds. The impact of the recession on this sector has been relatively mild. For a budding Indian entrepreneur who follows the above rules, this is as good a time as any to attract funding