What Investors Look Out For 2
This article is written by Jeremiah Uke, a Contributor Author at Startup Istanbul.
Eren Bali is an entrepreneur, CEO, and co-founder of Carbon Health, for 9 years and counting he has also served as a co-founder and CEO of Udemy, an online learning platform used all over the world, Eren was present as a speaker at the Etohum Startup Istanbul 2014 conference, where he narrated his journey with his now global ed-tech startup.
Eren advised the pitching startups at Startup Istanbul on common mistakes to avoid when pitching their solution to investors. Eren saw a company that made a platform that makes it easier and more efficient to get substitute teachers in schools. They are making $100 million after operating for three years, they put over two years of work to do this.
Investors want to see something in your startup that is different, like a goldmine that most people are missing, they also want to feel like if they do not invest in your company, they might regret it later when your company becomes bigger.
Another common error made by startups is in their business models, it matters when your business needs a profitable pay designation for growing, another mistake entrepreneurs make is having more than one business model, you should have just one business model. For Udemy, the one business model was selling courses online. Udemy competitors like Coursera and Udacity were trying to use a smart model where they would hire their best students for companies, to get a referral fee paid by the companies. Some investors bought into this but it is terrible.If your business model takes up to 10 minutes to describe, it is a terrible business model. Most models are straightforward like, I give you a service and you give me money. It is important to find a lot of creativity in your business but not in how you make money.
Relative numbers matter more than absolute numbers, the number of uses or traffic you have is not really interesting, but things like the amount of revenue you are growing every week are interesting. If you are in a very early stage such as the pre-funding stage, you should be growing at least 10% per week. Others include the amount of money you make per user or an active user, these kinds of numbers cause smart insights. For example, a startup that pitched earlier mentioned that they make 5% for every user that comes online, these scenarios allow for comparisons between the startup and a big company, you can say “we are making 10 times more than google”.
Something else to note as a startup is that having a lot of business involvement contracts do not work, you should only care about 3 things, one is going from idea to product, building an amazing product and talking to customers, everything else is unnecessary and a waste of time. When you are raising money, you raise funds for a while, and then go back to talking to customers and selling your product.
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