Your checklist for investing - and pitching - right [Know your VC]

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This is an edited crosspost with Nuwait.

Arzan VC partner Hassan Zainal’s famous checklist is one document he doesn’t leave at home.

Drawn from past experiences, trials and errors mentioned in a previous feature after investing in around 15 companies over the past three years, Kuwaiti investor Zainal says he has eight criteria he looks at when evaluating any startup.

  • Personality: This measures a founder’s character, whether they accept criticism and new ideas, and lead with passion. They should be a team player, willing to listen, make logical arguments and not be overly ambitious.

"We don’t want to drive the boat."

  • The technical background: the team must have a technical founder in order to be on top of the development process and able to execute well.
     

  • The size of the founding team: Arzan doesn’t invest in single founders.

"It’s more healthy when you have two founders. The chances of being successful, creative and come out with solutions to problems is faster with another founder."

  • The return on investment: The business should cater to a large scalable market which can potentially give us a 50 percent internal rate of return (IRR) after exit. This return is what we look for from each investment to insure our portfolio achieves its overall return target.

  • The sector: understand the sector you’re investing in, what drives it and where the opportunities are.

"We said no to hardware startups. They are capital intense and we don’t understand it."

  • The traction: this doesn’t have to be translated to revenues, but numbers of users or anything that shows that the business model is proven.
     

  • The outreach: the fund looks at global ideas or clones that can be scaled outside of this region, such as Careem which Zainal called a global idea able to expand outside of the GCC and MENA.

"We did invest in Careem, a clone of Uber… [but] Careem’s market is huge in Pakistan and Egypt."

  • The culture: The idea should not be related to religion in any way whatsoever, according to Zainal.

Once these boxes are ticked, the fund looks at the market, the product fit, the revenues and more details on the team.

Next time you pitch to Arzan VC, make sure you have these crossed off your list.

Feature image via Northern Trust.

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