What do VCs

2.  Problem Description
 Solution (how does the product/service solve the
problem)
 Market
 Team – Integrity & Complementing
 Opportunities & Threats
 Financials

3. Whom is it
Impacting
What is
the
extent of
Impact
The
Problem
What is
the cause
of pain
What is
the
benefit
of relief

4.  Problem Definition
◦ Must be customer specific and quantitative
 Quality of data
◦ From multiple sources & specific
 Customer Validation
◦ Data backed and not vague

5.  Extent of relief
◦ Does the proposal significantly solves the problem
 Validation with customers
◦ Do the customers also feel that their problem is solved
 Market Insertion strategy
◦ Should be compatible with existing system
 Simplicity of Solution
◦ Should not use too many technologies
◦ Must be simple
 Solution Risk
◦ Should be compatible with existing standards

6.  Total market potential
◦ Large addressable market should be existing
◦ Too small a market trying to aim a major share is not attractive
 Industry Growth
◦ Proposed industry should be high growth & not contracting
 Barrier to competition
◦ A unique technology or process not easy to copy
 Customer readiness
◦ Provisional order in hand is a very strong point
 Expected market share
◦ Even a small market share must be capable of giving returns
 Barrier to entry
◦ Should be difficult for competitors to enter- atleast 6 months
into operations

7. Opportunities Threats
Other
Risk of time &
applications
Cost
for the product
Other By
Market risk
products or
Other
markets Legal risk

8.  Market regulations
◦ Too many regulatory obligations make idea unattractive
 Monopoly vendor/client
◦ If there is just 1 buyer/supplier of the related product it
makes proposal risky
 Gorilla competitor
◦ The idea should not have any major competitor or entry
threat in near future
 Time to market
◦ The idea should be capable of being commercialized in a
very short time
 Potential Application
◦ If product can be applied in many domains it becomes less
risky

9.  Fund requirement
◦ If the fund requirement is spread out it makes funding
easier
 Expected ROI
 Cash Flow
 Costing Assumption
◦ Concrete quotes should be in hand and costing should not
be arbitrary

10.  VCs look for concrete plans, with proper research
done on same
 Team is very important i.e. it should be trust-
worthy & possess complementary skills
 The founding team must be flexible and not too
obsessed with idea
 Some of the above criteria may over-power all
other criteria in some cases

11.  Amit Chopra