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Your startup has to be a tech startup to get funded

Working with several companies, we have rarely seen investors who invest only in tech startups unless they are industry-specific. This notion that only tech startups get funded is a myth. What investors look at is innovation. They have three main criteria they look for: the industry size and potential, how the startup is adding value to the customer, and the moat the startup brings to the table.

The industry size and potential show if the startup has enough room to grow into a large corporation. This is understood by looking at how big the industry is and how many players are trying to capture that industry's potential. The next step is to analyze how the startup brings value to the customers. This shows how the startup fares against other competitors. In the Wild West of the corporate world, it is often seen as the survival of the fittest, and the company providing the highest value is perceived as the fittest in the market. This is where innovation comes into the picture. If the startup mirrors what everyone else is doing, it cannot provide a higher value to the customer. The strength of thinking something useful that no one else thought of takes companies a long way.

The final criterion is the moat. Assuming that the industry is vast, and the startup is providing the highest value to the customer, making them the superior player in the market, the next question is if they can stay there on top. The factors that keep the startup on top are called the moat. The moat could be the product, logistics, or company operations. If the startup has an ace up its sleeve that other companies cannot follow, this gives them the advantage of staying on top. Innovation also plays a vital role in this aspect. An innovative product or a business model that makes it hard for others to enter your space defines your moat.

As observed above, tech is not a factor for investors to invest in a company. It is the innovation that matters. Tech is just one of the catalysts that could drive innovation. We see several examples of non-tech companies that have made it big and have acquired millions of dollars in funding. Lenskart, CarDekho, Nykaa are some of those companies. These companies have focused either on the quality of their product, the quality of their service, or the quality of their operations to provide the best value to their customers.


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