The West Coast's investor and startup communities came together today at the SFU Harbour Centre for the 24th Angel Forum, a chance for companies to pitch their wares in front of the people who can take their enterprise to the next level. The Forumn started with a session entitled "What VCs look for", a guide for investors to the methodology of getting funding from VCs.
VCs are primarily looking for technology-based companies with strong management that preferably have seen a few foundings and exits prior to their current venture. Another very important factor is whether a potential investment opportunity is aiming at a market with a big payoff, in the neighbourhood of $500 million or higher.
As a rule of thumb, a VC will see 80 to 100 business approaches a year, and 20 of those will get to a pitch meeting, four will get detailed due diligence, two will get a term sheet and one will receive funding.
VCs also look for the "four Ms", defined as "Magic," or the "bleeding from the neck problem" that a company is solving, the market that company is targeting, the management of the company (and what holes need to be filled within that management structure), and of course, money.