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Merve Kagitci Hokamp
Merve Kagitci Hokamp
Executive & Business Coach I Ex-Google I INSEAD MBA I Ex-Consultant I Business Advisor
Published Jul 17, 2023
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In the ever-changing world shaped by the Covid-19 pandemic, entrepreneurship has emerged as a powerful force, igniting the dreams of countless individuals. The New York Times reports a remarkable surge in entrepreneurial activity, with Americans launching a staggering 4.4 million businesses in 2020—a remarkable 24 percent increase from the previous year. This surge in entrepreneurial momentum has been further fueled by the expanding range of funding options available to innovative startups. As a mentor within the Google for Startups program and an experienced coach for entrepreneurs, I have had the privilege of gaining invaluable insights while intimately listening to the founders' concerns and apprehensions. It comes as no surprise that one of the foremost worries for entrepreneurs is securing funding from venture capital firms. In this article, I will share my findings on the prevailing market trends and delve into the essential qualities venture capitalists seek in a compelling startup pitch.
Venture capital had experienced a meteoric rise until recently, with low interest rates and limited investment opportunities driving substantial capital into startups and pushing valuations to new heights. According to the Economist, the amount of money flowing into startups doubled in 2021, reaching nearly $640 billion. However, the tides have turned as soaring inflation and surging interest rates cast a shadow over the market, resulting in a significant downturn. Global investments in startups plummeted by a third last year, and the valuations of private startups dropped by 56% between the final quarters of 2021 and 2022, drawing comparisons to the dotcom crash of 2000-01.
Fortunately, the current landscape holds greater promise. Startups today boast stronger balance sheets compared to two decades ago, and venture capital firms find themselves armed with a substantial cash reserve of approximately $300 billion, often referred to as "dry powder." While VCs approach investments with increased prudence in light of market dynamics, they are also eager to deploy this capital strategically. This begs the question: what precisely captures the attention of venture capitalists when presented with a startup pitch?
Let's delve into the key factors that VCs consider when evaluating startups:
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It's important to note that while these factors are generally important to VCs, the weight placed on each factor may vary depending on the specific investment thesis and preferences of individual VCs. Founders should tailor their pitches to highlight the elements most relevant to the VC they are pitching to and be prepared to provide detailed information and data to support their claims and projections.
Connect with me at leadrisecoaching@gmail.com if you have any questions / comments / experiences you would like to share on VCs investment strategy and/or entrepreneurship.
#startup #vc #fundraising #entrepreneurship
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Merve Kagitci Hokamp
Executive & Business Coach I Ex-Google I INSEAD MBA I Ex-Consultant I Business Advisor
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Original Blog Post: https://www.leadrisecoaching.com/post/inside-the-mind-of-venture-capitalists-what-vcs-look-for-when-evaluating-startup-opportunitiesVC Question Databank Worksheet: https://www.leadrisecoaching.com/_files/ugd/116ce6_ff58af4bf9864d2399ced708d2b6e945.pdf?index=trueSign-up to my newsletter for more content like this one:www.leadrisecoaching.com/newsletter
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