Written By: Marc Halpin
Twenty years ago, my (then) co-founder and I asked ourselves a pivotal question: Is our startup a good fit for venture capital?
After bootstrapping for four years, we had a strong team, paying customers, and growing momentum. But raising venture? That felt like an entirely different challenge. We pitched to a bunch of firms, and while most passed, one investor wrote us a check. We raised our first round – but truthfully, we didn’t fully understand why that one VC backed us while the others declined.
Fast forward to today, after raising over $100M for Kerosene companies and my own ventures I now have a lot more clarity on whether a startup is a good fit for venture capital. If you’re considering raising venture, focus on these five critical factors – the 5 T’s:
1. Team
Investors don’t just back ideas; they back people. Ask yourself:
- Does your team have the skills, resilience, and adaptability to execute?
- Have you built something before, or can you prove you can now?
- Can your team navigate uncertainty and pivot when needed? A weak team can sink a great idea, but a strong team can turn an average idea into a billion-dollar company.
2. Technology
VCs want defensible, scalable technology that creates a real competitive advantage. Consider:
- What makes your tech unique?
- How does it create lasting differentiation?
- Can it scale efficiently as demand grows? If your tech isn’t solving a problem in a unique way, securing VC funding will be tough.
3. TAM (Total Addressable Market)
A startup without a large market opportunity is like a rocket without fuel. VCs will ask:
- How big is your Total Addressable Market (TAM)?
- More importantly, what portion of that can you realistically capture? A massive TAM is enticing, but your ability to penetrate that market matters just as much.
4. Timing
Even the best ideas fail if they arrive at the wrong moment. Ask yourself:
- Why now?
- What market trends support your growth?
- Is the market primed for your solution, or are you betting on a shift that hasn’t happened yet? VCs want startups that hit the perfect inflection point where market demand, technology, and customer behavior align.
5. Traction
Potential is great, but proof wins. Traction is the strongest de-risking factor for investors. Show them:
- Revenue growth
- Customer adoption
- Strong retention and engagement Traction proves your idea is more than just a concept—it’s something real, something people want, and something worth betting on.
Are You Ready for Venture Capital?
If my younger self had known these 5 T’s, our fundraising journey would have been much more strategic. Before chasing VC, assess your startup through this lens. If you can confidently check all five boxes, you’re in a strong position to raise capital.
Remember, venture capital isn’t just about getting funded – it’s about building something truly fundable.