100X.VC’s Sanjay Mehta shares tips on understanding investor minds at TechSparks 2021
The entrepreneurial journey is not an easy one. While starting up, a founder needs to not only focus on solving problems through its innovative solutions, but also needs support from other people such as investors and teams to help the idea succeed.
In any business, it is important to invest in its solution in order to scale it up. Thus, investors, especially in the early stage, play an important role in the success of a company.
At YourStory’s flagship startup-tech event TechSparks 2021, Sanjay Mehta, Founder and Partner, 100X.VC, explained that venture capitalists mostly think of startups as a modern version of an inventor.
“Seed funding is the launch pad. So every idea would need seed funding to kick off and begin across. At the early stage, investors are driven by hope. They look into the founder’s mind and vision, and fund on the basis of hope and not on performance metrics. That is where you need to start thinking that as an entrepreneur about how do I create that hope in the investors’ minds,” Sanjay said.
“Ideas are very fragile. Besides the capital, early-stage entrepreneurs need lots of mentoring nurturing. Somebody has to coach them and help entrepreneurs move to the next level and just capital would not help. So that is why at 100X.VC, we talk about capital plus education and lots of mentoring,” he added.
Winning investors’ mind
The first question that early-stage entrepreneurs need to answer to the investors is the reason behind their company’s existence, explained Sanjay. The entrepreneur needs to convince the investor about the potential market opportunity and where they place themselves.
The investors will need to understand why a particular product or service will sell in the market more than other existing ones and why the moment is the right time to build the particular startup.
The founders will also need to be aware of all its business numbers — starting from daily or monthly users, MRR, ARR, revenue, and then how much capital would be required to scale it up
“Talk about why isn't everyone working on it and competition. It is important to know the landscape and entrepreneurs should be knowing more than the investors, right? You want to be positioned as the expert in your domain. So if there is competition, know the landscape and what is going to be your advantage against the competition. What is going to be the disruption which you are creating and how you will create those barriers to entry for other competitors to come into the market,” he said.
He explained that the founders will also need to explain why they think their startup would do better than the existing established incumbents.
For a line-up of all the action-packed sessions at YourStory's flagship startup-tech conference, check out the TechSparks 2021 website.