As an active angel investor and successful serial entrepreneur, Praveen Sinha identifies key broad criteria for startups that investors look before making an investment.
Praveen Sinha has always expressed his belief that it is the team and the idea behind any startup that impresses him the most in the first place. “The utmost thing which I look for is the founding team, especially the experience and the passion required for the execution of their unique business idea, how deeply they are involved in that idea,” he says. However, he also identifies a list of few other broad criteria before forming up the essential investor-startup bond.
If the team is good and then the idea grows through lots of slugs. They may have textured with a certain solution but the solution or the approach requires changes. If the team is good, they can certainly do it. Another thing is to look at the opportunity they are trying to create. Market size and acquisition of clients is also essential, how easy or difficult it is going to be — Praveen Sinha
Sinha believes that perseverance to overcome the threat of competition and wit to turn it into an opportunity is essential to not only ensure existence in the market but for the flawless growth of the startup. “How easy it is for a new entrant to copy and replicate the idea. No idea can be fully protected until it is super deep in terms of patent etc, hence, it is just in terms of USP through the founding team or the execution but not very easy to replicate the concept. If competitors come, the team is competent enough to handle it and ensure that they are not killed in the process.”
Moving forward, Praveen Sinha identifies two key elements — business viability and profitability as crucial requirements. “Earlier I used to have a longer gestation period of three-four years when ventures were able to raise multiple rounds of funds. But currently, viability and profitability are the next requirements. Many startups have scaled on huge capital funding. Though they will justify the valuation in the long term which has now become 10-15 years. You will see a lot of startups with a billion-dollar evaluation, but the bottom line matrix is still not stable.”
“I don’t have a view, or I don’t suggest they will not become viable or they will not be able to justify the valuation but currently at the time frame of 10-15 years it does not look feasible. Now my focus is on an idea which might not become a unicorn in valuation but in terms of bottom-line profitability and self-sustainability, it can find its path,”Sinha adds.
A leading figure in the Indian startup sphere, Praveen Sinha has helped many startups to scale their businesses. As an investor, he says that fin-tech, health-tech, and agriculture are the spaces he is looking forward to making investments in.