Deal maker: When evaluating pitches I look to see whether the business idea is a sound one. My criteria for this is as follows: what is the problem this company solving? Is the solution to the problem a sound one? How large is the addressable market, can the company scale? What’s the competition and how does this company differentiate itself?
Equally important, if not more important, is the founder. There’s an investing adage, ‘Bet on the jockey and not the horse.’ Essentially you can have the best company, but if the founder is not good it will not succeed. Conversely, you can have an ok/average company, but if the founder is great (executes well, knows how to pivot when necessary) you can have a success.
When making an investment I evaluate the founder(s) and my criteria includes whether they have domain experience/knowledge related to their product or service. Are they a leader and can they inspire people to give them money, join their team, etc? What is their mindset and are they coachable?
Deal breaker: Â If the company is a lifestyle business. If it is a business that is not scalable I will not invest in it. The only way an investor gets a return on investment is if the company is acquired or has an IPO. Lifestyle businesses do not have either of these exits.
Sound advice: Know who you are pitching to and do your homework on the investor. Often people contact me to invest in a company, which is not the type of company I typically invest in. Also, cold emailing or calling a potential investor will likely be a waste of time. Investors are interested in deal flow emanating from referrals from people they know. If you do not have access to investors, go where they go. Attend your local networking event or meetup related to angel or early-stage investing. Most major cities have angel groups. I suggest every early-stage entrepreneur who is seeking investors read David Roses book called Angel Investing. This book provides great insight into what angel investors look for.