Through the eyes of investors: What investors look for in a founder and his team

Startup: Investors carefully assess the qualities of a founder like his passion and determination among other things before investing in a company.

Startup India, Startup Tips, Funding, How to raise funds for your startup
Investors carefully assess the founder's background.

Startup India: Within four years of launch of Start-up India scheme by Prime Minister Narendra Modi, Indian start-ups and entrepreneurs are on a fundraising spree to execute their ideas. In 2018, Indian startups raised a record amount of over $38 billion, including Flipkart’s $16 billion deal with Walmart. Other top start-ups like Byju’s, Ola, Oyo and Paytm also received funding from some of the world’s most renowned investment firms and investors including Warren Buffet. However, these stories will be incomplete without the stories of their founders like Paytm’s Vijay Shekhar Sharma, or Byju Ravindran who founded the E-learning company Byju’s or other top founders like Oyo’s Ritesh Agarwal or Ola’s Bhavish Aggarwal. The founder is one of the most important factors while making an investment decision, there is a saying in our industry that more than the business you invest in the person, said an angel investor who has arranged funding for more than 25 start-ups.

Potential investors look for several things while making investment decisions. They consider a lot of factors, including market size and the scope for a new player in the market. They also assess a start-up’s ability to execute the business idea among other things. However, the founder’s background and passion, and the quality of team members are very important for them.

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“When we evaluate a proposal then we thoroughly screen the founder’s background, his experience and his ability to see it through. Passion and experience of the founder are some of the most important factors for us while making an investment decision,” said Dhruva Nath, an angel investor, who also teaches at MDI Gurgaon.

Investors like him carefully assess the passion of a founder and his determination to accomplish the project despite adversities.

“It’s said in our industry that more than the business, you invest in the person – the founder,” said Sushanto Mitra, CEO of Lead Angels Network who has arranged funding for more than 25 start-ups.

His network of more than 100 investors based in India and abroad has arranged the funding for start-ups like Indore based B2B e-commerce platform ShopKirana among others.

Then comes the quality of team members. Investors don’t just rely on the passion and determination of a founder. They also look at the quality of team members.

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“The first thing that we look in a team is its ability to execute the idea? The second thing is the team’s perseverance? Whether they will stick together? Will they stay on the course? We also look at all these things,” Sushanto Mitro told Financial Express Online in an interview.

“One of the most important thing that we look for is that the team’s ability to listen to others. I mean we assess how flexible and adaptable they are,” he added.

“Investors look for a balanced team,” says Abhimanyu Bhardwaj of Launchspace, who also advised Telangana government on entrepreneurship development.

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“What excites investors is a group of people with diverse backgrounds with a demonstrated history of being able to experiment with new ideas,” he said.

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First published on: 09-09-2019 at 21:43 IST