August 10, 2015

5 Things Venture Capital Firms Really Look for in Startups

Entrepreneurs Investing in Entrepreneurs

Dayakar Puskoor is the General Partner at Naya Ventures is an early-stage venture capital firm focused mainly on US and India-based companies.  With 16 portfolio companies currently, and managing a $100 million + fund, Dayakar and his team know quite a bit about evaluating startup companies looking for capital.

I had the privilege to sit down with Dayakar recently to find out how Naya Ventures does their evaluations.  He shared five main points that the firm looks into, determining the startup's strength or weakness in those areas.  And it's not about a yes/no or a checklist, but it's about whether Dayakar and his team feel they can work with startup's team and can help them in areas where they may be lacking.

"Don't look at me as an investor.  Look at me as another entrepreneur."

- Dayakar Puskoor

5 Point Evaluation Overview

1.  Does the company need help on the product strategy?

Is the product alive and strong already, or is it still an idea that needs help coming to life?

2.  Do they need help with team members?  

This may be helping them with a technical cofounder or simply hiring in levels throughout the company.

3.  Does the startup have the right strategy and the right message? 

As Dayakar points out, it's costly and time consuming to have to rebrand and shift your message later.  Going along with this area, Naya finds out if the startup is going into a category or are they trying to create a category.  Creating your own category can be quite an uphill battle.

4.  What is the current state of business development and sales for the company?

Is there already a customer base?  If not, what is the plan to develop one?

5.  Fundraising/How do you exit?

We dive into this more in the interview - a company's founders should be thinking about what the natural life span and outcome of the business should ultimately be.

We certainly dive even deeper into what goes into Naya Ventures' approach to investing in the full interview.  Check out the full interview by clicking below.  And see all of the show notes with links to what we spoke about


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