Venture Capitalists are known to invest in unicorns that
prove to be home run for their LPs, but now that crowdfunding is turning
everyone into a VC, how does one identify those winners? While there is no
secret recipe for success, here are a few things NIN.VC looks for while
investing:
1. Disruptive
Technology
A disruptive technology is an innovation that changes the
way an existing industry functions and also helps create a new market and
value network, displacing an earlier technology or a way of doing business.
E.g. 3D printing has been used for rapid prototyping and is being applied in a
number of industries today, including manufacturing, automotive, consumer,
aerospace, defense, and especially healthcare. As the accuracy and materials
market have improved, the medical space shows great potential for this
technology. There are about 123,851 people currently on the organ recipient
list in United States; that list grows on an average of 12% annually. On the
other hand, organ donor increases about 1-2%, and 21 people die every day
because they cannot find a right organ. What if 3D printing tissues can help
save some of those lives?
Every sector at some point is up for disruption. E.g. Traditional
TV has been on a decline for the past few years, because the consumer behavior
patterns are changing. People are spending more time on their personal devices
like phone, tablets, & PCs. An average American spends about 3 hours
everyday on their personal devices, and this is the first time, the time spend
on personal devices have surpassed time spent watching TV. So what does this
mean for the Ad Tech Industry? The current digital advertising market is $75
billion and traditional TV advertising is $112 billion, and as the consumer
migrates to watching more digital TV or on demand content, this $112 billion
will migrate to digital advertising, which is a huge opportunity and disruption
for the ad tech industry.
2. Revenue
Model
Great ideas / technology needs to be backed
by a solid revenue model in order to attract customers as well as attain
profitability for the company to be an attractive investment opportunity for a
VC.
3. Industry
Analysis & Competitive Landscape
A startup needs an ecosystem to thrive
upon, thus it is very important for a company to understand the market
dynamics, its impact on their industry, product, and also have a good
understanding of the competitive landscape in order to achieve long term
success. A disruptive technology needs to scale and a through analysis helps
gage those risk and rewards.
4. Entrepreneur
/ Team
CEO is the captain of the ship; and at
NIN.VC we start with an entrepreneur because entrepreneurs build companies and
not the other way around. Some of the qualities VCs look for in an entrepreneur
are ability to dream big with ideas that scale, certain personality traits and
work ethics like being focused, disciplined, and hard working. It’s important
to have industry expertise and knowledge or surround yourself with people that
compliment. However, flexibility and choices an entrepreneur / the team makes
determines the future of the company.
5. Execution
Strategy
An amazing entrepreneur with a disruptive
technology, a solid revenue model, and good understanding of the competitive
landscape goes to vain, if the company does not communicate effectively or has
a good execution strategy.
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