With the development of economy and technology, more and more start up companies emerge every year, which also provide investors with more opportunities. However, how to identify good start up companies to invest in becomes an important issue. Based on the analysis of seed rounds and angel rounds of some famous start up companies like Uber, Square, Robinhood etc., this article summarizes the key characteristics of good start up companies worth investing from aspects of founder’s capabilities, market opportunities, business models and fund performances etc. Investors need to evaluate startups comprehensively and make wise decisions.
Strong technical capabilities and big vision founders
Most good start up companies that achieved great success have founders with excellent technical capabilities and great visions, like Intel, Microsoft, Tesla etc. These founders are able to lead the R&D of core technologies, iterate products constantly and have long-term goal of changing the world.
Tapping blue ocean markets
Worth investing start up companies are often operating in fast growing markets with great potential, such as semiconductor, computer, Internet, fintech and biotech industries. They satisfy emerging needs that have not been met well previously.
Innovative and promising business models
Good start up companies need to have business models that are highly scalable, able to generate sustainable cash flows or robust enough to weather economic cycles. For example, Robinhood uses PFOF model to earn commission from market makers.
Efficient use of funds with solid returns
Worth investing start up companies can make efficient use of funds from seed rounds and angel rounds, iterate and validate their business models quickly to build foundations for next rounds of funding and scaling up.
Long termism mentalities
All the start up companies mentioned in this article like Uber, Square, and Robinhood treat entrepreneurship and venture investment as long term undertakings, which allows them to be more strategic and capture much greater opportunities.
In conclusion, worth investing start up companies often have ambitious founders with technological capabilities, clear visions and long term mindset. They are operating in fast growing markets and proposing innovative solutions to serve emerging needs. These startups have promising business models and ability to use funds efficiently to fuel their growth.