Though it is true that investors are open to supporting the evolving tech sector, they consider many things before investing. Some focus on execution over the great ideas, while others go by the knowledge and passion of the founders. However, there are many other criteria that are of utmost importance.
Below are the seven positive things most investors look for before they invest in a tech startup-
The Startup Company Is Tapping the Right Market
With AI and machine learning going to a whole new level, a lot of
startups have come up. Though they claim to have a unique AI solution, taking them to the market seems very unrealistic, especially when there is no potential market for the product.
Before investing in startup companies, investors look for realistic projections. If the startup doesn’t fit the market, it won’t grow. Thus, it is necessary to understand what customers need.
What Makes an AI Product ofaStartup Different From The Others
With so many AI solutions available in the market, there could be an overlap with the existing solution. Thus, it becomes important to explain how your product is different, how it is better than the ones that are already available in the market, or how it will cater to the customers’ needs differently. Furthermore, the ongoing competition makes it challenging for startups to scale their products to a level higher than the others.
The AI Startup Is A Genuine One
Today, almost every startup calls it an AI startup. Moreover, there is an overflowing number of AI solutions, making it difficult for investors to pick the right one. Therefore, a startup should have a prototype of the product that is ready to use and the technology ready to be explained to potential users.
How Much The Market Is Engaging With Your Products
Show the investors that your product isn’t just a talk but is getting enough engagement from the market. It will de-risk the investment opportunity. Further, if you have reliable data that supports what you claim, it can work wonders. Not only it backs the product, but it also strengthens your commitment you take for your startup.
The Startup Focuses On Value Creation Of The Product
The value creation comes from the products, and data aggregation helps the startups in the long run. Aggregating unique and exclusive data can prove to be valuable for the startup. For example, an agricultural startup can aggregate data points, like weather data, crop image data, or other valuable data.
It also tells that the startup is serious about leveraging this data to improve its product and add more features. The startups should have long-term value creation models and short-term ones to appear more promising to potential investors.
How The Startup Plans To Utilize The Money
Whether it is product development, advertising, or improving the infrastructure, investors often look for a good idea about how the startup plans to use the funding amount. This helps ascertain that your plan is trustworthy, and the investors, founders, have plenty of ideas about the technology. The investors can also go through the
startup database to find the right startup for investing.
Team Management and Domain Expertise
It is another important thing investors look for in tech startups, especially in AI and analytics, because it requires expertise to create tech solutions. They also look for a team that understands the technology, build AI products from scratch, and tap into the right market. There should be a strong management team to run the startup with ease.
These are some of the most important things investors look for before they invest in a startup.