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  1. Home
  2. Funding
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  4. What investors look for
Step 03 · Fundraising guide

What investors look for

The four things being assessed underneath every question, and the metrics that survive scrutiny.

6 min read

Whatever is being asked, the assessment underneath is the same four things: is the market big enough to matter, is there evidence this works, is there a reason it keeps working once others notice, and are these the right people. Different stages weight them differently — pre-seed is almost entirely the fourth, Series A is heavily the second — but all four are always in play.

Evidence that counts

  • Retention, shown as a cohort curve that flattens. A curve that flattens above zero is the single most persuasive chart in early-stage fundraising.
  • Revenue, with its quality attached: recurring or one-off, gross margin, concentration. ₹1 crore of ARR from forty customers is a different company from ₹1 crore from two.
  • Payback period and how it has moved. Customer acquisition cost recovered in under twelve months, and trending down, is a business; trending up is a subsidy.
  • Organic pull — referral, inbound, usage growing in accounts you are not touching.

Evidence that does not

  • Registered users, downloads, waitlist size. All measure interest at the moment of lowest cost.
  • GMV without take rate, or revenue without margin.
  • Letters of intent and pilots that have not converted.
  • Awards, accelerator logos and press. Pleasant, and not evidence of demand.

The team question

"Founder-market fit" means something specific: some reason you will see things about this problem that a smart generalist would not, and some reason you will still be doing it in five years. Prior domain experience is the usual form, but not the only one — obsessive, sustained engagement with the problem reads the same way. What does not read well is a founder who could just as plausibly be running any of four other startups.

Investors are also assessing whether they can trust your numbers. One overstated metric found in diligence recontaminates every other number in the deck, including the true ones.

General information for founders, not legal, tax or financial advice. Fundraising documents are binding in ways that are not obvious from reading them — take professional advice on anything you are about to sign.

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