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How Investors Evaluate Startup Ideas

In the first article of this series we covered the three stages of startup projects and the chances of each stage attracting investment. Now let’s look in detail at the first stage and how investors evaluate startup ideas.

Ideas can come to mind anywhere if we are creative people, know what we want and pursue our goal persistently. However, in the flow of idea generation it is very important to stop at the one that can become something special. Family, friends, like-minded people and colleagues play a very important role here. After all, the people in your close circle are the first listeners and the first target audience of the future founder.

As a rule, a stream of emotions produces one idea after another, linked by a common object. In this process it is important to answer these questions: what makes the idea unique, whether the innovation is noticeable, what advantages it has over competitors, and what problem it solves. The answers help identify the key idea and build the startup concept.

It is worth noting right away that the startup idea stage, like all later stages of the project, is hard and painstaking work. It contains a whole list of important tasks, and solving them requires making exclusively correct decisions.

The startup concept helps choose the right direction for finding the project’s business model as a whole, which supports attracting venture investment for the startup’s development:

Team

The founder should decide how to assemble a team so that the startup works quickly and effectively. At this stage some tasks can be done independently or by hiring specialized freelancers. But for the project to develop in the future, a cohesive, well-motivated, professional team is needed. The founder must clearly understand how the team will work going forward and how it will evolve.

Purpose of investment

For an investor, financing a startup idea is the most exciting stage, since it does not yet require large capital outlays but can lay the foundation for a serious, long-term partnership. Preference goes to unique new startup ideas that can pioneer a particular area of business.

The founder can get investment to build prototypes of the startup project, a working sample, and to carry out marketing and social research that shows whether the proposed startup idea is viable and needed.

The investment amount can range from 2000 to 10000 USD. Investment at this stage is not especially risky, unlike later stages of the project’s development, such as the “startup project” or “startup foundation” stage.

Personality of the founder

When deciding on investment at the “startup idea” stage, the investor also assesses the founder’s personality. Preference goes to founders who already have successes in implemented and operating projects. It is very important that the founder can show leadership qualities and has traits such as: drive, high ambition, a desire to prove to themselves and others that they can do what others cannot; enthusiasm, creativity, charisma, the ability to think outside the box; the ability to inspire others with their idea, persistence; professionalism, high learning ability, and the ability to adapt to quickly changing circumstances.

If these character traits are present, the investor may overlook the lack of completed projects, since founders are most often young people aged 20 to 30 who simply have not yet had the chance to prove themselves.

Keep in mind that the startup development period is very short (6–12 months), and investment at the startup idea stage can be obtained today. So do not put off what you can do now. Send your applications about your innovation to info@1exip.co.uk We are open to cooperation and ready to give advice on promoting your idea!

To conclude, here is some motivational data:

Edison made 10,000 failed attempts before he invented the electric light bulb. Walt Disney had to hear 303 refusals from various banks before he got what he wanted to found Disneyland. 134 publishers rejected the book “Chicken Soup for the Soul” by J. Canfield and Mark V. Hansen before it became a worldwide bestseller. Do you see a pattern? If you want to achieve your goal, be persistent and do not stop at failures, which may simply be a normal trial!