Before you pitch, it helps to know how investors think. The Startup India knowledge bank has a guide called “What do investors look for?” This article summarises its nine criteria, the exit methods it lists and what it says about a term sheet.
Quick facts
- Nine criteria: objective and problem solving, market landscape, scalability and sustainability, customers and suppliers, competitive analysis, sales and marketing, financial assessment, exit avenues, management and team
- Exit methods listed: mergers and acquisitions, IPO, selling shares to other VC or PE firms, distressed sale and buybacks
- Term sheet: described as non-binding, covering valuation, investment structure, management structure and changes to share capital
- Last checked: 5 November 2026 against the Startup India portal; this is a summary, not investment advice
The nine criteria
1. Objective and problem solving: your offering should solve a distinct customer problem; the guide notes that patented ideas or products show high growth potential for investors
2. Market landscape: investors look at market size, obtainable market share, product adoption rate, historical and forecast growth rates and the macroeconomic drivers of the target market
3. Scalability and sustainability: show a credible path to near-term scale and a stable business plan, and address barriers to entry, imitation costs and expansion plans
4. Customers and suppliers: identify buyers and suppliers clearly, and consider customer relationships, how sticky the product is and vendor terms
5. Competitive analysis: give an honest view of competitors; the guide says there can never be an apple-to-apple comparison
6. Sales and marketing: the guide warns that no matter how good the product is, if it finds no end use it is no good; address sales forecasts, target audiences, product mix and conversion and retention ratios
7. Financial assessment: provide a detailed model covering cash inflows, required investment, milestones, break-even points and growth rates, with assumptions that are reasonable and clearly stated
8. Exit avenues: potential acquirers or alliance partners are a valuable decision factor, and exit options include IPOs, acquisitions and subsequent funding rounds
9. Management and team: the founders’ passion, experience and skills are equally crucial alongside the other factors
How investors exit
The guide lists:
- Mergers and acquisitions: a sale to another company
- IPO: described as one of the most preferred exit methods
- Selling shares: selling equity to other VC or PE firms
- Distressed sale: selling a financially stressed business to another company or financial institution
- Buybacks: founders repurchasing shares if they have liquid assets and want control back
It adds that ideally the VC firm and the entrepreneur should discuss exit options at the beginning of negotiations.
What is a term sheet?
The guide describes a term sheet as a non-binding list of propositions. It covers four provisions: valuation, investment structure (equity, debt or both), management structure (board composition and appointment or removal procedures) and changes to share capital.
How to use the list
Treat the nine criteria as a pre-pitch checklist. Write down your answer to each one, state your financial assumptions clearly and plan exit options early. For funding sources designed for startups, see our guides to the Startup India Seed Fund Scheme and the Fund of Funds.
Frequently asked questions
How many criteria does the guide list?
Nine, from the problem you solve to the management and team.
Is a term sheet binding?
The guide describes it as non-binding.
What exit methods does it list?
Mergers and acquisitions, IPO, selling shares to other VC or PE firms, distressed sale and buybacks.
Does the guide give pitch tips?
It does not have a dedicated pitch section, but its criteria work as a checklist to prepare before pitching.
