Are you building a business? 5 criteria to help predict opportunities

"Those who look at the world with entrepreneurial eyes are able to see opportunities in challenges. If you are like this, you have probably encountered a situation more than once when you see an opportunity to create a thriving business, but you do not find investors (or you do not know how to do it). In the press release, five tips on how to present, Justinas Pašys, head of the Lithuanian business angel network "LitBAN", shares his thinking  so that idea receives the deserved attention of investors.

 

"Lietuvos Junior Achievement", a youth entrepreneurship and financial literacy education organization, organized an international competition for the presentation of student company ideas "Pitch Battle". The organization turned to LitBAN, asking them to advise students and help them understand what investors are most interested in.

 

5 things investors pay attention to

 

When asked what investors look for in business ideas, Justin Pašys says that although there are many criteria, he singles out five that investors take into account most often.

 

1. The first and main criterion is the team. Justin says that a very popular mistake is to have three in one area, e.g. marketing, for professionals to create a technological start-up. Such a strategy usually does not work due to a lack of competencies: the team needs a financial expert, a programmer, and other expertise.

 

For young (or less experienced) business creators, J. Pašys has an additional piece of advice: "If you are younger than most other startup founders in Lithuania, you need to think about how you are better than them, more experienced people. Maybe you are fans of gaming, streaming, crypto or tiktok - maybe there are areas where you know more?"

 

2. The second criterion, very important for investors, is the market in which you operate.

 

"Find out if the market is growing, if it's popular right now, what percentage of that market you can take." Pay attention to your competitors: how many there are, how advanced they are, when they started. You will help yourself if you create products in new markets where there are fewer competitors or they are technologically weaker", J. Pachys argues.

 

3. The third criterion is the product you are developing. J. Pashys advises that you should approach investors with a working product.

 

"It can be the most basic version of your product, also known as the MVP (minimum viable product), but it must already be working," he says.

 

4. The fourth criterion is the business model. According to Justin, it is common for business angels to invest in those products and business models that are easily replicated on a large scale.

 

"A very simple way to understand whether a product is easily replicated on a large scale: whether the product or service is used by 5, 500 or 5,000 users, for which the human resources of the same team are enough," explains J. Pachys.

 

5. The fifth criterion is the problem you are solving. Before approaching investors, you need to find out if the problem is real or if you are only imagining it.

 

"A very common mistake we see is when solutions are looking for problems. At first, startups create a solution, and then they look for a problem to solve," says J. Pachys.

 

He adds that once you're confident you've found a real problem, you should still consider having someone test your solution. "You don't need a lot of such people, but at least a few testers would help investors make a decision if they shared their opinion on how your product works, whether it's convenient and enjoyable to use."

 

A pitch to investors can be an exhilarating event rather than a daunting one

 

The head of "Lietuvos Junior Achievement" Anželika Rusteikienė says that during the "accelerator_x" program, students learn various ways of presenting their startup idea. For example, students learn how to present their business extremely quickly, in just one minute, try longer presentations, and learn how to answer questions from the committee or investors.

 

"Early entrepreneurship education, the opportunity to try many times to experience the first mistakes and successes helps students prepare for the future: when their businesses go beyond the school, students will have a good understanding of what and how to say, and presentations will not only not be intimidating, but will be welcome and fun challenges." - the name of the delivery fee is A. Rusteikienė.

 

She adds that the international idea presentation event will not only help students practice public speaking skills, but will also create an international learning environment."