Investor Criteria
How do investors evaluate a proposal? Which criteria are important and in what order? Here’s an overview of criteria used by angel investors and venture capitalists.
| low relevance | medium relevance | high relevance | extreme relevance |
|
Investment criteria |
Angel investors |
Venture capitalists |
|
1-30 ranking scale |
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|
People |
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| Enthusiasm of the entrepreneur |
1 |
3 |
| Trustworthiness of the entrepreneur |
2 |
1 |
| Expertise of the entrepreneur |
4 |
2 |
| Investor liked entrepreneur upon meeting |
5 |
9 |
| Track record of the entrepreneur |
10 |
8 |
|
Market or product |
||
| Sales potential of the product or service |
3 |
5 |
| Growth potential of the market |
6 |
6 |
| Quality of the product or service |
7 |
10 |
| Niche market |
9 |
13 |
| Informal competitive protection of the know-how |
12 |
14 |
| Nature of competition in the industry |
17 |
16 |
| Overall competitive protection of the product or service |
21 |
11 |
| Formal competitive protection of the product or service |
27 |
20 |
|
Financials to screen for potential gains |
||
| Perceived financial rewards |
8 |
4 |
| Expected rate of return |
11 |
7 |
| High margins for business |
15 |
15 |
|
Financials to monitor the operating firm |
||
| Low overheads |
16 |
21 |
| Ability to break even without further funding |
18 |
19 |
| Low initial capital expenditures needed |
20 |
24 |
| Size of the investment |
20 |
23 |
| Low cost to test the market initially |
22 |
22 |
|
Other |
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| Possible investor’s involvement in business development |
13 |
18 |
| Potential exit routes (liquidity) |
24 |
12 |
| Investor’s strengths in filling gaps in the business |
14 |
26 |
| Investor’s understanding of the business or industry |
24 |
17 |
| The venture is local |
23 |
27 |
| Presence of co-investors |
26 |
25 |
>>> Professional investor pitch decks in MS PowerPoint PPT(X) format