⏳ 25 min to read

What is Investability?

“Investability” refers to the likelihood that a startup will attract investment based on its potential for growth, scalability, and return on investment (ROI). Investors assess investability using key factors, including market opportunity, team capability, differentiation, and revenue potential.

However, not all startups fit the venture capital model—and that’s perfectly fine. Founders must ask themselves:
"Do I really need venture capital?"

Is Venture Capital Right for Your Startup?

Venture capital is not for everyone. It works best for startups that:
✅ Are aiming for exponential growth (not organic or linear growth).
✅ Plan for long-term fundraising (Series A, B, C, and beyond).
✅ Operate in a large, scalable market with billion-dollar valuation potential.

Amazon vs. eBay: Two Paths to Growth
To illustrate how different business models affect funding strategies, let’s compare Amazon and eBay:

If your startup isn’t built for exponential scaling, alternative funding options like grants, bootstrapping, or revenue-based financing may be better suited.

Key Factors That Determine Investability

Investors use specific criteria to assess whether a startup is investable. Here are the seven key factors:
1️⃣ Market Opportunity – A large, growing market with a real problem that your startup solves.
2️⃣ Team & Execution – A strong team with relevant expertise, leadership, and execution capabilities.
3️⃣ Competitive Advantage – A unique product, technology, or defensibility (e.g., IP, network effects).
4️⃣ Business Model & Revenue Potential – A clear and scalable way to generate revenue.
5️⃣ Traction & Early Validation – Initial users, customer interest, or partnerships that prove demand.
6️⃣ Unit Economics & Scalability – Low acquisition costs (CAC), strong lifetime value (LTV), and a scalable cost structure.
7️⃣ Investor Fit & Market Timing – Alignment with investor interests and current market trends.

If your startup lacks some of these elements, that doesn’t mean you won’t succeed—it just means you may need to validate your business further before seeking investment.

Business Validation: Does Your Startup Solve a Real Problem?

Many startups fail because founders don’t deeply understand their customers' needs. Before raising money, validate your business by ensuring:
✅ You’re solving a top-priority problem.
✅ Customers truly need your solution.
✅ Your business model is viable and scalable.

How to Validate Your Business Idea
To test and validate your idea, break it down into three key risks:
1️⃣ Desirability Risk – Do customers actually want your product?
2️⃣ Feasibility Risk – Can you build and deliver the solution effectively?
3️⃣ Viability Risk – Can you make enough money from this business?

To validate these, run small experiments such as:
📌 Customer Interviews – Talk to potential customers to understand their pain points.
📌 Landing Page Test – Build a basic website and track interest (email sign-ups, inquiries).
📌 Pre-Sales or Waitlists – Sell your product before it's fully built.
📌 Prototype Testing – Launch a beta version and gather real user feedback.

Successful startups continuously test, iterate, and refine their ideas based on real-world feedback before scaling.

What’s Next?

Today’s goal was to determine whether you truly need venture capital and validate your business idea. If your startup is venture-scalable, you’ll need to prepare for investor expectations in the coming days.
At the end of the Investability Sprint Bootcamp, selected startups will have the opportunity to pitch to investors during our Pitch Day & Investor Gathering on February 18th at Imaguru Warsaw.

Key Takeaways from Today:
✅ Not all startups need VC—determine if it’s the right path for you.
✅ Investors assess startups based on growth potential, scalability, and revenue model.
✅ Business validation is critical—ensure you’re solving a real customer pain point before raising money.

📺 Now, watch our short video interview and read some cases.

📢 Afterwords, complete today’s exercise and get ready for Day 2!

🚀 Let’s make your startup investor-ready!

Raised multiple funding rounds to scale rapidly.

Reinvested profits aggressively into expansion.

Became a global tech giant.

Required minimal external funding.

Became profitable early and focused on sustainability.

Had a moderate growth trajectory but still successful.

Getting Ready for Fundraising: The Investment Readiness Checklist

⏳ 25 min for self-assessment

Raising investment is more than just having a great idea. Investors look at multiple factors before deciding to fund a startup. Today, we’ll walk you through a structured approach to determine whether your startup is truly investment-ready.

Before you dive into fundraising, take time to assess where you stand using this 17-Point Checklist. This will help you identify strengths, weaknesses, and areas to improve before you approach investors.

Section 1: The Investment Proposition – Why Should Anyone Invest in You?

Investors are flooded with pitches. To stand out, your startup needs:
✅ A clear investment proposition – Why is your business an opportunity worth investing in?
✅ A strong value proposition – What unique problem are you solving?
✅ A well-defined target market – Who are your customers, and how big is the market?

Key Questions to Ask Yourself:
1️⃣ Do you know who you’re pitching to?

• Have you identified the right investors (VCs, angels, crowdfunding) for your startup?
• Do you have a shortlist of 30+ investors who focus on your industry?

2️⃣ What is your value proposition?

• Can you describe what your company does in one sentence?
• How does your product create value for customers?

3️⃣ What problem are you solving?

• Is this a must-have or a nice-to-have solution for customers?
• Have you spoken with potential customers to validate the problem?

4️⃣ How well do you know your target market?

• Can you clearly define your Total Addressable Market (TAM)?
• Do you have a market entry strategy?

5️⃣ Have you prepared a compelling teaser proposal for potential investors?

• Your initial outreach should be short and compelling.
• Keep the focus on the investment opportunity, not just the business.

Section 2: The Pitch Deck – Presenting Your Business Clearly

Your pitch deck is the most important tool to convince investors. A strong pitch deck should include:
✅ Market opportunity and problem statement
✅ Business model and revenue strategy
✅ Traction and key growth metrics
✅ Team expertise
✅ Funding needs and investment proposition

Key Questions to Ask Yourself:
6️⃣ Have you prepared a revenue model?

• Can you show how your business will generate revenue?
• Do you have a clear breakdown of revenue projections for the next 12-36 months?

7️⃣ Can you provide updated financial projections?

• Investors expect you to know your numbers.
• Have you accounted for key financial metrics like burn rate, CAC, LTV, and gross margins?

8️⃣ Can you demonstrate traction?

• Do you have customer adoption, partnerships, or letters of intent (LOIs)?
• If pre-revenue, can you show a growing user base or product-market validation?

9️⃣ Have you put together a marketing strategy?

• How will you acquire your first 1,000 customers?
• What is your estimated customer acquisition cost (CAC)?

🔟 What does your product roadmap look like?

• Have you outlined major milestones for the next 12-18 months?
• Can you clearly explain how investment funds will be allocated?

Section 3: Justifiable Valuation – Are Your Numbers Defensible?
Investors care deeply about valuation because it determines their return on investment.

Key Questions to Ask Yourself:
1️⃣1️⃣ Do you have a valuation?

• Use the Valuation Scorecard Template (Google Sheet) from Serif to benchmark your startup.

1️⃣2️⃣ Is your valuation realistic?

• Are you basing it on industry benchmarks and recent funding rounds?
• Have you compared your valuation to similar startups in your space?

1️⃣3️⃣ Have you factored in the broader market context?

• Economic conditions, industry trends, and investor sentiment matter.
• Your valuation should reflect market realities.

Section 4: Team & Execution – Do You Have the Right People?
Investors invest in people as much as they invest in businesses. A startup with a strong team has a higher chance of securing funding.

Key Questions to Ask Yourself:
1️⃣4️⃣ What is your team’s skill set?

• Do you have experts in sales, product, technology, and finance?

1️⃣5️⃣ Does the management team have a proven track record?

• Have your co-founders successfully built or exited a company before?
• Are they full-time and committed to the business?

Section 5: Exit Strategy – How Will Investors Get Their Money Back?
Investors expect a return on investment (ROI) in 5-10 years. They will ask:

Key Questions to Ask Yourself:
1️⃣6️⃣ Have you considered your exit strategy?

• Will you aim for an IPO or a strategic acquisition?
• Have you identified potential acquirers?

1️⃣7️⃣ Are the founders aligned on the exit strategy?

• Conflicting visions between co-founders can raise red flags for investors.