What are VC firms and investors looking for in 2022/2023 💰?

What are VC firms and investors looking for in 2022/2023 💰?

In recent weeks I’ve been meeting with some incredible businesses and founders, from fintech’s who are disrupting the banking industry, AI specialists who are changing how we use social media and businesses building flying vehicles (yes, it’s as interesting as it sounds!).

Although these are very different business, the commonality between them is that they’re all looking to secure funding which will allow them to scale 📈. To be able to add the most value to our scale-up businesses, I’ve recently been meeting with VC firms and investors to discuss what they look for when choosing what businesses they will invest in, and what the trends are, with some insights shared below 🔎.

The common theme across different VC and investment firms is that although the volume of investment deals has decreased, the figure invested per round has seen an increase to ensure their portfolio businesses have a longer run rate. This is certainly the case with earlier-stage funding rounds, with SEIS and EIS funding still being secured quarterly, and businesses choosing to extend their Pre-seed/Seed rounds and going through Series A next year instead.

We asked the VC firms and investors what they look for when investing in the current climate, here are the key points 🔮:

• Companies with a clear vision.
• A product/service that solves a problem for a large market.
• Companies with a strong management team, specifically a CFO and CTO that they have confidence in when looking at tech start-ups.
• Clear revenue streams. This could be a clear pricing model, a small number of current customers or a ‘waiting list’ for when the product is released.

The start-ups who will secure funding in this climate will have a deep understanding of their customers and what they need. They will have a team with the skills and experience to execute on their vision. Lastly, they will have a business model that generates profits while also delivering value to their customers. 💸

VC firms are also looking for startups that are capital efficient, meaning they don’t need a lot of money to grow. This is because VC firms want to see a return on their investment, and the best way to do that is to invest in companies that don’t need a lot of money to grow. 📈

So if you’re looking to raise money from a VC firm in 2022 and early 2023, make sure you have a strong team, a clear vision, and a product or service that solves a real problem for a large market. And don’t forget to have a capital efficient business model!

If you’re a candidate interested in securing your next role in a scale-up business, a founder who is looking to build out your leadership team pre or post-funding, or if you want to hear more about the trends in investment going into 2023, book a call with me here 💻