What Investors Look For in an Early-Stage Company
Team, market, evidence, and structure: the four questions investors ask, and how to prepare honest answers.
Understanding how investors think lets you present your company clearly and decide which investors fit. Most early-stage investors work through some version of four questions. I describe my own version in how I evaluate an early-stage startup. Here is how to prepare for each as a founder.
The team
Be ready to explain why you are the right people for this problem. Describe what you have done before, what you have already built without outside money, and what skills the team still lacks. Admitting gaps, and having a plan to fill them, builds trust.
The market and "why now"
Describe who your customers are, how many of them there are, and what recently changed that makes your solution possible now. Avoid sweeping claims such as "everyone needs this." Specific beats large and vague.
The evidence
Show what you have learned from real people: customers who paid, users who returned, pilots that worked, interviews that changed your plan. Retention and repeat use are more persuasive than sign-up numbers. If you are pre-revenue, show what you tested and what happened.
The structure of the deal
Know what you are offering: the type of investment, the amount, and the terms. Module 4 covers this. Be open to feedback from investors, but be clear about the terms that matter most to you.
Your task for this module
Answer each of the four questions in three sentences or fewer. Then ask someone who does not know your business to read the answers and tell you what is unclear.