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Strong Market Potential
VCs look for startups that address large and growing markets. Your startup should have a clear value proposition that meets a significant market need or solves a critical problem. The market potential should be significant enough to justify a high-growth business model.Innovative Technology
VCs are typically looking for startups that are leveraging innovative technology to solve a problem. Your technology should be a significant advantage and differentiate you from competitors. A proprietary technology or intellectual property can be a significant advantage.Scalable Business Model
VCs are looking for startups with a scalable business model. A scalable business model can grow without proportional increases in resources. Startups should be able to demonstrate how they can increase revenue without increasing costs.Strong Traction
VCs are looking for startups that have demonstrated strong traction in their market. Traction refers to the early signs of market success, such as customer acquisition, retention, revenue, and user engagement.Experienced Founders
VCs are looking for founders with relevant industry experience, a track record of success, and strong leadership skills. Founders should be able to articulate their vision for the company and how they plan to execute it.Sign up for the Connect Nigeria daily newsletter
Strong Team
VCs are looking for startups with strong teams that can execute the company’s vision. The team should have the necessary skills and experience to build and scale the business.Competitive Advantage
VCs are looking for startups with a competitive advantage that can sustain over time. Your startup should have a defensible position in the market, such as proprietary technology, exclusive partnerships, or a unique business model.Achievable Milestones
VCs are looking for startups with achievable milestones that can demonstrate progress and attract further investment. Your startup should have a clear roadmap of how it plans to achieve these milestones.Realistic Valuation
VCs are looking for startups with a realistic valuation. The valuation should be based on the company’s current and future potential, not on unrealistic projections. For example, a company that has a ready market with future potential for growth will readily attract venture capital.Exit Potential
VCs are looking for startups with exit potential. Your startup should have a clear path to an exit, such as an IPO or acquisition. VCs invest with the expectation of receiving a return on their investment, and an exit event is how they realize this return. One example of a Nigerian startup that has attracted VC funding is Andela, a talent accelerator that trains software developers and places them with top technology companies. Andela has raised over $180 million in funding from top VCs such as Spark Capital, Chan Zuckerberg Initiative, and GV (formerly Google Ventures).Register to attend the CN Business Mixer
In conclusion, Venture Capital funding is not for every startup. To determine if your startup is VC-worthy, you should assess the market potential, innovative technology, scalability, traction, experienced founders, strong team, competitive advantage, achievable milestones, realistic valuation, and exit potential. By meeting these criteria, you can increase your chances of attracting VC funding and accelerating the growth of your startup. Featured Image Source: Entrepreneur
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High-growth firms can receive money from venture capital (VC), a type of private equity investment, in exchange for ownership shares. Startups with the potential for large returns are invested in by VCs, however not all startups are VC-worthy.
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