In 2020, the world as we know it underwent a significant change, and this upheaval also affected how we view social connection. Events, meetings, and in-person encounters were either severely restricted or outright forbidden, so we resorted to digital relationships to fill the void.
And it was because of this change that individuals started extensively relying on the use of social discovery platforms to interact with others, exchange stories, and produce content. When face-to-face encounters weren’t possible, videoconferencing platforms allowed us to stay in touch; dating applications allowed us to try out new relationships; and streaming sites offered a variety of gaming possibilities and livestreams that sparked in-person talks about our favorite topics.
The market for social discovery is still growing three years later. By 2028, it is anticipated that the social discovery market’s dating segment would have generated $10 billion. And because social discovery platforms have such room for expansion, venture funders are still interested in them.
But what factors do VCs take into account when making social discovery investments? Dmitry Borisovich Volkov, a serial tech entrepreneur and founder of the global tech company Social Discovery Group, shared with us the key factors that investors pay attention to first of all.
A Verified Record of Achievements
Investors want to be sure that their money is being used on projects that have a probability of succeeding. VCs search for teams with a track record of success in their area when assessing potential investments. They’ll be interested in past achievements, setbacks, and lessons learnt from them that can be applied going forward. An effective team should be made up of a variety of seasoned business owners, engineers, marketers, designers, and other professionals with significant experience in their specialized domains.
Investors will also be interested in the team’s personality features, how well everyone gets along, and whether or not the group can maintain focus on reaching its goals despite challenges or failures. Investors can tell you know what you’re doing and can handle the hurdles of starting a firm in this industry if you have a strong track record and a cohesive team.
A Robust Plan and Vision for the Business
If a business has a clear vision of who they want to be and a workable plan for getting there, that is one of the main things venture capitalists look for when investing in them. Very frequently, founders have an idea but not enough information about their strategy.
To increase sales and achieve profitable growth, it is crucial to have a clearly defined strategy. VCs will assess the market’s size and competition as well as the company’s advantages and differentiators.
Without this transparency, venture capitalists are unlikely to go beyond an initial encounter. Make sure you have a thorough business plan that describes your goals and a clear path to success if you want to make an impression on investors.
A Strategy for the Long Run
Focus on what the market will require in five years rather than just what it needs right now. What types of trends do you anticipate? You may produce something genuinely creative and revolutionary that will endure by adopting a long-term perspective. You must be able to scale your business as necessary to meet demand if you desire long-term success in the market.
Compelling Metrics that Indicate Engagement
In the beginning of any social discovery firm, engagement metrics are crucial. These metrics demonstrate to VCs how well users are responding to your business, product, or service.
The daily active user count and time spent are the two most crucial engagement indicators. DAU reveals how many people use your product or service on a daily basis, whilst time spent reveals how long they spend interacting with it everyday. High numbers indicate that you’re on the correct track and should carry on in this direction going forward.
A Precise Understanding of the Market Opportunity
Understanding the market opportunity for any company idea or product that they are contemplating investing in is extremely important to VCs. This entails comprehending your target market and the reasons they would choose your product or service above those offered by existing competitors in social discovery fundraising campaigns.
It also entails estimating the size of the global addressable market, or the number of prospective customers for your product or service. This makes it possible to assess the possibility for further growth.
Setting Apart from the Competition
Find strategies to stand out from your competition by observing what they are doing. When the time comes to demonstrate how your product can disrupt the market, this will offer you an advantage. For instance, certain niches are more successful than others in the enormous social discovery area.
Because dog owners are not necessarily viewed as “minority” in any way, a platform that targets dog lovers may not be as successful as one that targets a marginalized community. Platforms for the LGBTQ+ community or those with physical disabilities, on the other hand, might succeed more because these people frequently struggle to build meaningful relationships.
Evidence of Successful Implementation
In the end, VCs are searching for a business that can carry out its strategies and develop over time. Successful investments are those where businesses continue to prioritize their mission while demonstrating indicators of progress toward their objectives. Startups require time to create something extraordinary, so this doesn’t happen immediately. Nevertheless, if you have well-defined ideas and forward-moving momentum, venture capitalists are more inclined to invest in you in the long term.
Knowing what VCs are looking for—a strong track record, business model, team dynamics, market insight, and proof of execution—is the first step in conducting a successful fundraising round. Founders should feel more at ease negotiating the world of social discovery fundraising with this in mind.
