How does a VC fund make the decision to invest?
Our seventh video in the series of 1-minute tips for startup founders from Alexander Konoplyasty, co-founder of Flashpoint Venture Capital.
âť“”How does a VC fund make the decision to invest?”
👉Top VC funds are generally focusing on the team quality, uniqueness of the product, potential market size
Top VC funds are generally focusing on the team quality, uniqueness of the product, potential market size, and some hinting indicators like revenue growth rates, high NDRs, high LTV/CACs, etc. If you have all of that, you are on to something super cool. But not all the time, you get all of these things aligned straightaway which does not mean you are doing something wrong or you can’t raise.
Firstly, don’t optimise for fundraising or a particular VC. Think about your customer, who they are, and what problem you are really solving for them. How complex is it really? How much money would they pay for solving it vs other players in the value chain, you need to be able to grow your ACV. Try to avoid competition or entirely differentiate from them. Focus on your customer needs and product gaps, what “easy” sales and marketing channels have you not covered by capturing easier wins.
All of this will make VCs curious about you and they will come directly or make it easier when you start marketing yourself. A lot of times VCs act as a herd and FOMO is an important factor.