When looking for potential businesses to invest in at BECO Capital, there are five big things we look for in a startup. Here’s a check-list of what you should consider before you make your pitch to investors.
- Do you have a strong founding team?
- Is your management team experienced with deep domain expertise?
- How proficient are your in-house execution skills?
- Do you continuously measure user and merchant activity?
- Do you have an existing actionable network that provides an advantage in your industry?
Typically, the ideal founding team consists of one visionary to imagine the future and the product roadmap, another to build the product, and another to “take the market.”
- Does your startup qualify as a transformational solution?
- Are you leveraging technology to transform your industry?
- Can you demonstrate that the solution you are offering is transformational?
- Is your solution significantly better than what is already out there?
- Does your solution offer more than just an incremental improvement in your industry?
- Is there a cost saving or gain in reach and efficiency that you can demonstrate?
- Is there a sizeable addressable market?
- Have you undertaken a “market sizing” exercise?
- Have you approached your “market sizing” as top-down, or bottom-up?
- How big is your potential audience?
- Is your market size significant enough to consider?
We avoid top-down market sizing, for example, the total spend in the F&B sector is $2 billion and if we capture 5% of this spend, this would equate to $100 million in revenues. Instead, we look for a bottom-up market sizing; also called “counting noses”.
- Has your startup demonstrated natural traction?
- Have you built a working solution or prototype that has generated traction (traffic, engagement, revenues, customers) with little to no marketing spend?
- Can you demonstrate “product market fit”?
- Do you have a strong understanding of the unit economics of your business model?
The most telling unit economics measures to consider are: a cohort analysis showing retention, the cost to acquire a customer (CAC), customer lifetime value (LTV) and the associated profitability of the business.
- What makes your startup defensible from competition?
- Does your startup have network effects, complementary effects, virality, lock-ins, etc?
- How different is your customer experience and product to what exists today that makes it difficult to replicate?
- Does your business create a positive feedback loop?
- Will the quality of your offering and strength of business benefit from having more active users?
For example, network effects are exhibited in marketplaces. The larger the marketplace, the more valuable it is to all its stakeholders.
The deadline for submissions is May 11, 2016.
ArabNet’s Digital Showcase is the most comprehensive convergence of young digital enterprises in the Middle East. It is an opportunity for young companies who already have a structured product offering and good traction in their markets to build relationships with big clients and strategic partners in Dubai – the region’s most important digital market.
Participating entrepreneurs showcase their enterprises, highlight the latest updates about their products or services, and connect with investors, media, and potential clients at the region’s largest web and mobile conference.