How Investors Think About Ideas - Wufoo Cofounder Kevin Hale

Summary

Investors evaluate startup ideas based on three components: the problem, the solution, and the insight. The best approach is to start with a problem, which helps identify the target customer and market size. Investors use a formula to determine if a company can become a billion-dollar business. They consider the price of the product and the number of users needed to reach the revenue goal.

Investors assess four types of beliefs when evaluating startup ideas: beliefs about the founders, the market, the product, and the acquisition strategy. They examine the founders' understanding of costs, customer acquisition, and profitability. Investors also evaluate the founders' ability to effectively communicate and tell the story of their company. Good social skills and communication are crucial for a startup to become successful.

Founders should start with the problem and determine what it would take for the idea to become a billion-dollar company. Investors look for belief in the founders, the market, the product, and the acquisition strategy. Providing proof and belief in these areas will attract investor interest.

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