You may have woken up this morning with a brilliant idea or at least you think it’s brilliant. Maybe it’ll be the next Facebook, Paypal, or Instagram! Or maybe not.
Before you start trying to raise capital for your new venture, take a minute to think it over. Venture capitalists are looking for investment opportunities that fit into certain parameters , parameters that are likely to bring a good return on their investments. Unfortunately, very few pitches that a VC sees will ever get funded.
So before you get up there with your presentation and your plans, take a look at our list of specific things venture capitalists are looking for. If your idea falls into one or more of these categories, you might just have a winner.
1. Something NEW
Here’s the facts: no one is going to get behind a copycat even if your idea has its own twist. So your brilliant concept of Facebook for pets well, you’re going to have a tough time inspiring any investors. Innovation is the name of the game when you’re looking to attract investors, so if your project is a copy or a spin of something that already exists, you might want to shelve it.
2. Something SPECIFIC
Your idea or product should be easily explained and it should have a specific purpose and target audience. The old adage “do few things and do them well” is very applicable here. Don’t try to hit so many platforms that you serve all of them poorly. Instead, narrow your focus and concentrate on doing one specific thing phenomenally.
3. Something EXCITING
At the very least, you’d better be pretty darn excited about it. If you get up there and pitch something in a ho-hum, take-it-or-leave-it fashion, your potential investors are going to walk out the door. However, if you’re bursting with passion for your project, convinced of its worth and driven to see it become a reality, your investors might just catch the passion as well.
4. Something BIG
Remember that VCs are not philanthropists. They’re expecting at least a 10X return on their initial investment. Because of that, your idea needs to be bigger than a local dog grooming salon. If your idea could potentially be a large public company someday, then go ahead and pitch it.
5. A SOLUTION
Finally, your idea should solve a common consumer problem. It can’t be one of those “nice idea, but not worth the hassle” kind of concepts. Think about it this way: would you go out of your way to use the product or service you’ve come up with? Do the benefits provided outweigh the hassle of use?
Take Paypal for example. There is some hassle involved in setting up an account, linking credit cards or bank accounts, and providing personal information. Those minor hassles are far outweighed, however, by the enormous convenience of a quick, secure way to send and receive money online. Your idea may not be on the Paypal scale, but the concept remains the same.