At Unitus Seed Fund, we get a LOT of inquiries for seed investments. Here are some tips for what gets our attention and interest.
1. Great Team. What is your team’s experience and how is that relevant to your business? Remember, as a seed investor, we are heavily betting on the team to be able to execute well overcoming the multiple obstacles which will inevitably cross your path.
2. Initial Market Demand. We want to see initial demand from actual paying customers. This differentiates a great theoretical idea (addressing a “need”) from something that people actually want (“demand”).
3. Promising Unit Economics. While we don’t require you to be profitable yet, we are interested in your unit economics learnings to date. We need to be able to see a glimmer of real possibility that at scale your business will be genuinely profitable.
4. Accessible Market Size. How big is the market today you could reasonably expect to be selling into? Of course, it’s also helpful to know what size you (and others) expect that market to be in 3-5 years. We’re looking first at India domestic demand. And we’re interested how you expect to “access” this market.
5. Scaled Impact on BOP. We are looking for businesses with the potential within 5 years to benefit the lives of at least 100,000 workers/families who live at the base of the economic pyramid (BOP). Creating a few hundred jobs? That’s great, but not enough for us to be interested. Are you creating improved livelihoods, better education outcomes or access to affordable products/services with potential for massive scale? That’s interesting to us.
6. Differentiation. How is your business differentiated from others? Know your competition and tell us about them in sober terms as this demonstrates to us that you have done your homework. What is the next best alternative to your product/service? Also, what sustainable advantages will you have or create?
7. Small Round Size. We invest very early in a startup’s life and generally want to be the lead investor. We typically initially invest about INR 25-50 lakhs. Our sweet spot is total round size of INR 50 lakhs – 1.5 crores. So, if you’re raising more than 1.5 crores of equity financing, it’s going to be a tougher sell to us. One question to think about: what’s the least amount of investor capital you need to validate your business idea?
8. Exit Opportunity. We need to understand how we might sell our investment in your company. We know this seems a long ways off, but we’d like your thoughts on ways that we might exit. If there’s no likely exit opportunity, we likely can’t invest.
If your startup is a good fit for the above items…