On November 5th, 2017, Riyad Abou Jaoudeh Executive Director for MEVP addressed the 021Disrupt Conference in Karachi giving a brief insight on “Into to the mind of a VC.”
As per Wikipedia,
VC’s or rather venture capitalists are a private equity that provide finances to start-ups and small scale enterprises in return for equity in the startups. Quite opposite to angel investors, venture capitalists invest a surplus amount of money up to $1M. VC’s comprise of influentials, usually company owners and business tycoons who finance startups with a small amount of their net revenue.
Picky Eaters
Venture Capitalists are very choosy. They seek start-ups which are primarily set to disrupt their counterparts. Why so? It’s because a VC group almost always invests in some risky business, where there is a high probability to eclipse the existing market players and innovate at the same time.
Dress to Impress: The Six Point Formula
Abou Jaoudeh says that all nascent startups should perfect the following six points to bag a hefty finance from a venture capitalist who sits in a cozy position in the business network.
1 – Teams
Teams should be composed of diversified personnel.
We often come across teams in which people specialize in the same area and are immediately turned off
says Riyad
make sure there is a healthy balance of expertise between all the team members
Teams should not concentrate in one specialty rather there should be a dynamic group of professionals who can co-exist harmoniously.
Also, founders are often the pivotal figures to be considered by VC’s. They are the backbone of the startup and are expected to have a good blend of leadership qualities, experience and expertise.
2 – Product
As mentioned earlier, “disrupt-looking” startups are the main focus of venture capitalists who are constantly on the look for something different. Monotonous and repetitive products have a slim chance of being funded. The product should give consumers a feel that they are using something new.
3 – Market
VC’s look for a big market and big verticals. The market should be exciting and thriving. The product must have a high survival and acceptance degree.
4 – Competition
Competition is healthy they say; but it’s healthy within limited doses. Funny though it may sound, venture capitalists fear a daunting competition more than a puppy fears a weekly shower. Investments must be brave and daring but not stupid, as per Riyad Abou Jaoudeh. No one would be in their sane mind to offer a competition to a contender with a well settled position in the market. Startups with a moderate market rivalry is most preferred; after all the competition is itself the push to improvement,
5 – Scalability
Startups that are scalable in terms of production, distribution, networks and infrastructure attract the most heavy capital. Good startups always digitalize their businesses to provide maximum scalability and ease of distribution and access. Amazon.com and Dell are examples of how something physical such as a book and a computer respectively, can be distributed in a cost-effective and thereby scalable manner.
6 – Deal Terms
VC’s are a minority on board; hence as minority owners they will demand for protection, they will enforce rights. The most feasible deal terms will ensue in a strengthened trust and work relationship.
Up Close and Personal
We managed to get a very busy man at a very happening event fish out some time for us. We came up with some questions which Mr Abou Jaoudeh happily answered. The answers were pretty difficult to catch though.
Clarity.pk: You mentioned you’ll be investing in startups in Pakistan… why Pakistan?
Abou Jaoudeh: Pakistan is a wonderful place to invest. I find the startups here very adventurous and are mostly targeted towards a dedicated audience. The market is selective and it’s always easier to target such customers.
Clarity.pk: What does MEVP (Middle East Venture Partners) aims to do for startups in Pakistan?
Abou Jaoudeh: We aim to financially support startups that prove themselves in terms of growth and performance. Not only that, we are also interested in expanding their network internationally.
Clarity.pk: So, what’s the worst part of your profession?
Abou Jaoudeh: Shutting down businesses of course! It feels like a heartbreak.
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Please visit MEVP to get more details about the fund: http://www.mevp.com/
P@SHA’s Technology Incubator, TheNestIO: http://thenestio.com/