A recent article from the Harvard Business Review, discussed  ‘How Venture Capitalist Make Decisions.

Venture capital has become an essential driver of economic value. The first task a Venture Capitalist faces is connecting with start-ups that are looking for funding—a process known in the industry as “generating deal flow.”

The best deals often comes from a network of trusted investors, entrepreneurs, and professors. Early stage funders tend to be a tight knit group who talk to each other and are quite happy to put a black mark against pitch with which they have been particularly unimpressed. 

 Early-stage founders who seek angel investors too soon often run into two distinct problems: Premature burnout and insurmountable reputational
damage. 

Investors do not fund startups without proven products, customers, and technical capabilities already in place.

According to a survey, more than 30% of deals come from leads from Venture Capitalists’ former colleagues or work acquaintances. But what if you do not have that network already set up. 

  “Few VCs use standard financial-analysis techniques to assess deals. The most commonly used metric is simply the cash returned from the deal as a multiple of the cash invested.”  

 Venture Capitalist reject far more deals than they accept, they can be very aggressive when they spot a company they like

What should you consider?

But, what are the most important factors to consider before your are facing your investors?   See our blog ‘ 6 Start-Up Funding Checklist‘