Decoding VC Rejection: Why Investors Pass on Promising Startups
Startups require capital to fuel growth, covering everything from initial setup to staff hiring and geographical expansion. Venture Capitalists (VCs) have become a primary funding source for startups seeking external financing. However, securing VC investment is highly competitive, with only a small percentage of startups successfully closing deals after pitching.
# Key Criteria for VC Investment in African Startups
According to Startuplist Africa, Nigeria alone boasts over 250 startups. While 2020 saw 82 Nigerian startups raise $170 million, this was a decrease compared to the $377 million raised by 147 startups in 2019. Dayo Koleowo, Partner at Microtraction, shared insights with Technext on the essential elements VCs evaluate before investing. Koleowo emphasizes that while investment focus varies by stage, certain core criteria remain consistent. One of these non-negotiables is building the right team. From Microtraction’s perspective, a strong team is paramount for success.
In conclusion, securing VC funding is a challenging process for startups. While capital is crucial, VCs carefully assess various factors, particularly the quality and capabilities of the founding team, before committing to an investment. Understanding these criteria is essential for startups seeking to navigate the funding landscape successfully.
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