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Atal Malviya

Atal Malviya is the Chief Executive Officer of – India’s first European Accelerator. Atal is a successful entrepreneur and an angel investor based out of London. He has founded and exited VC funded technology startups and invested in handful of technology startups in Europe and India. He writes and speaks about Tech Startups, Startups investment, Accelerators and Incubators, Tech innovations and Big data analytics.

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Why An Angel Investor Says NO

Always remember, your business is to build a great start-up, investor's business is to invest money in a great start-up to get high returns – founders and investors are partners on the same side of the game.


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In the midst of India’s astonishing startup boom, many young and experienced professionals are taking a plunge. Investors are leaning towards tech startups and are willing to invest money into the businesses that have ground-breaking products.

But often, it’s not the original idea or the first product that crosses the line of exit – business ideas change over the course, product features get added and removed, market conditions, disruptive technologies, and consumer demands could shift at any moment. Startups need to adapt fast or get swallowed by the competition. This adaptation may even require a fundamental alteration of initial business model thereby pivoting accordingly.

Early stage venture capitals and angel investors are aware of this concept while they invest their money in early stage startups. As an early stage investor myself, I have seen founders pitching their ideas to me and my team, but many times these startups fail to get into the term-sheet stage due to some fundamental issues.

Here are some key points to consider before approaching a venture capital and/or an angel investor.

1.      TeamPeople invest in people (as they buy from and sell to) – It’s all about the team, no matter how strong an idea the founder has, the fate of the startup  ultimately rests upon the shoulders of the team. If you are a single founder with no team around, your chances of getting a serious investor on board are very thin. Co-founders and founding team with complementary skill sets, along with the product is the complete buy-in for the investor at this stage.

  2.      Buzzword pitch Founders who couldn’t able to (or want to) explain their business in a simple language but rather choose to go with fancy buzzwords, may lead to an impression that they don’t have a great business communication. This might lead to an assumption that the team lacks a member who can lead the business side – Founding team might have great techies, but one cannot run a business with only geeks in the team.

3.      I am not full time yet – Founders who want to keep his/her current full-time job while raising money for the startup gives an impression that they are not fully committed to the idea. The investor doesn’t feel secured about the money he wants to put in, he might consider you as high risk and are willing to gamble with his money. Trust disparities might arise.

If the founders are not full time on this, why will an investor or other employees will? More importantly when you are working for someone else’s office, who is running your company?

4.      I have no competition – If you don’t have any competitor in the market it may mean one of two things – that this product has no need in the market, or you haven’t done enough research. In either case, it is not an investible business.

5.      Unrealistic assumptions Optimism and assumptions are two key factors when you start the business, but unrealistic assumptions and over-optimism won’t take you for long.

6.      My accountant knows the numbers – Founders who couldn’t able to talk through their financial projections are not to be trusted with handling investors’ money. Be it the business plan or the marketing plan, experienced investors quickly find holes in them. Founders should make themselves able to discuss and explain any queries that may arise during the pitch. Making mistakes in the planning stage/ documents are a big deterrent for any investor. 

10. Top down approach of forecasting – I heard so many pitches where founders say – “Even if I can get 5% of the $100 million market, we will make $5 million – And it’s a simple math, investors know this very well” – What concerns investors in this approach is how would you get hold of that 5% market and in what time? To explain this you need the bottom-up approach with very basic assumptions like X number of salespeople with Y target in Z months to reach XX millions.

11. Faster, Better, Cheaper – If your value proposition doesn’t align with these three things, and is just a copy of an existing business – then your business is boring and boring is not investable.

I have done business both in the west and in India, and the above-mentioned insights are drawn from my experience of being on the both sides of the table, as a founder and as an investor.

These are basic common sense and fundamentals of any business. If you have all fundamentals correct any investor will be happy to have a coffee with you. I haven't listed out obvious points like market validation and customer needs, hoping that founders will address these issues before approaching any investor.

Always remember, your business is to build a great start-up, investor's business is to invest money in a great start-up to get high returns – founders and investors are partners on the same side of the game.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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