A conversation with a friend this morning on why not all innovations appeal to investors.

Startups are funded if they fulfill certain market needs, revolutionize tech, boost economies, and are sustainable with growth potential. Often, we focus on necessity and innovation but overlook the economic impact and long-term growth.

Investors, despite kindness, expect returns. Prominent accelerators often target 8x to 10x returns within 5-7 years. Like it or not, business growth is a key attraction factor. Even an unremarkable business with rapid growth will attract investors. Rapid growth here, can be organic or infused with multi-layer funding. In early stages, there’s no growth - hence potential growth becomes a decisive factor.

Startups and SMEs diverge as SMEs head towards stable growth with smaller incremental profits for investors, while startups tend to grow rapidly. Startups may evolve into SMEs or even larger enterprises.

Additionally, early adopters play a significant role. SMEs, often with established products/services like F&B, focus on branding, sales, and marketing in early stages, with continuous adaptation to their surroundings. Startups on the other hand must identify early adopters and market needs before they get to a stage of heavily investing in branding, sales, and marketing. Though riskier and takes more time, successful startups, once past the market penetration stage, gain higher confidence in branding and market growth.

Hardware startups esp if it comes with manufacturing is wayyy more complicated and expensive than software startup. Often times you don't want to expand on in-house manufacturing early own because of the high asset cost.

Entrepreneurs' understanding of growth and adeptness at handling change is a huge attractive factor to investors. Change matters as business evolution has to be constantly aligned with market demands, hence continuous shocks + recovery + building, happens in a loop.

Investors also assess how entrepreneurs allocate funds to maximize business output. Some prioritize personal branding to expedite growth, leveraging popularity to bypass organic growth. Certain investors are drawn to fame and succumb to the FOMO trend. Other investors are put off by it. Some entrepreneurs put in effort in business growth. Some just build and wonder why nobody shows up, blame the tech and everyone else.

A common misconception is that marketing occurs later in the process and is costly. This isn't true. Marketing is about reaching your target audience. Identify where your users are and connect with them. Understand what motivates them to share your product with others. And gather feedback to enhance their experience. Marketing costs escalate as the market size expands horizontally or vertically, typically in later stages when the product is more stable.

There are many entrepreneurs out there struggling to build, dealing with insanity, corruption day in and day out, working many jobs to bootstrap - so if you have any funds at all, be grateful and maximize its output.

Some of entrepreneurs biggest mistakes :

1. This idea that the world owes you because you are creating something.

2. Ego - massive ego

3. Bad management of fund

4. Assuming everything will work out.

5. Go big or go home. Most go home high and dry.

Some entrepreneurs that I’ve seen succeed

1. Adapt to change well

2. Decent relationship with everyone

3. Pick up after a fall, find better ways and try harder

4. Time optimisation

5. See a clear picture of the larger goals and the smaller steps of getting there

6. Realistic as much as they are optimistic

7. Connections - some make use of family, wealth etc. Some put themselves out there to get to know people

There's more to this but this is a wrap up on a short conversation on startups that are investor friendly.