In our time helping startups raise capital, we’ve seen pitches from companies of all stages, sizes, and industries. Each month, we receive many applications from startups and entrepreneurs looking to raise capital on the MicroVentures platform. To best serve the interests of our investors, each company must make it through a thorough screening process before we decide whether or not to work with them. Here are some big picture things we look for when considering raising capital for a company and tips for making your application shine.
What we look for
A lot goes into creating a raise on the MicroVentures platform. From conducting due diligence, creating the fund summary, submitting the necessary documentation, content creation, marketing, and more – it’s a time investment. As such, it only makes sense that we accept applications from companies we believe in and that we think will appeal to our investors.
Generally, we don’t limit ourselves to specific industries, so the criteria examined may vary depending on the specific industry of a given applicant. The primary four pillars we gauge an applicant by are the team, traction, deal terms/structure, and story.
Two of the most important question we ask when looking at a founding team are 1) Do we believe this team could make the business a success, and 2) Will they make good partners long-term. We want to be able to build long-term relationships with the companies we raise for so that we may be able to continue to work with them in subsequent rounds as they grow. As such, we highly value mutual respect and a solid working relationship.
Good traction can look very different from industry to industry, coming in many different forms. Broadly speaking, we look for notable revenue or user growth, patents or other intellectual property, significant partnership agreements, and brand awareness.
Historically, issuers have used convertible debt, revenue share deals, priced equity rounds, just to name a few, to finance companies. We recognize that deal terms are not one-size-fits-all, so we tend to be flexible in that regard. Overall, the terms should align with the stage of the company and the risk profile and potential exit strategy of the investment.
While a good story is subjective, we have found that having an engaging narrative behind your business can make all the difference between a failed and a successful campaign. We recognize that not every story may feel “groundbreaking,” but founders must be able to communicate the story of their business to us. This helps us to better communicate their story to our investors. Of course, investors want to see the potential for a return on their investment, and a narrative can help bring that potential to life.
If you’re ready to raise capital for your startup and you believe it meets our criteria, you can learn more about the application process for a capital raise on MicroVentures here and submit your application here.