8 Things VCs Look for in a Startup

Can you guess the number-one thing that draws in venture capitalists?

How about the number-two or number-three most important elements? Some might think that it's the product, the founder's track record, or some other factor. But when Christian Nagel, a managing partner at Earlybird Venture Capital, examines a new company, he is looking for one specific thing. “Top one, two and three are the team!” he told Benzinga. What's the fourth thing Nagel wants from a startup? “[It] should be a significant disruption/improvement of markets – no marginal innovation,” he insisted. Other things he looks for:

When asked if this is a good time to start a business, Nagel said that it “absolutely” was, especially overseas. “In Europe, times are perfect,” he said. “Good seed funding environment, more repeat entrepreneurs, and experienced teams.” If you're an investor looking for some advice on where to turn, Nagel recommends taking a look at Berlin. “Berlin is becoming the startup hub in Europe; the ecosystem is not Silicon Valley-like but [it is] creating its own unique DNA and [is] catching up,” he said. As a managing partner of Earlybird Venture Capital, Nagel has had the opportunity to be involved with several startup investments. One of them involves a social game company called Crowdpark, which announced

this week. “Crowdpark is on its way to become a category leader in social betting and gambling games and this is an important step in that direction,” said Nagel. “Further, there is a full pipeline of new games based on their unique ‘social dynamic betting' approach, which significantly differentiates them from any competitor. These will be complemented by social casino type of games launched online and mobile.” With regard to Crowdpark's market opportunity, Nagel believes that it is an “emerging category” that “will be huge.” “[There is] much growth ahead,” he predicts. “A new category for social games.” Nagel credits Crowdpark with taking betting and gambling into “an arena which is much more fun and engaging.” “Many of the so-called social games are not social at all, apart from exchanging scores,” said Nagel. “Social betting changes this. It's really engaging.” Earlybird Venture Capital first invested in Crowdpark in October 2010. “The fact that they had the potential to define a whole new social gaming category, really disrupting gambling and betting” attracted Earlybird to the company, Nagel explained. “And the team had developed unique skills around dynamic betting.” But when Earlybird made its first investment, Crowdpark only had a small alpha-test webpage. “Since then it launched the first and most successful social betting game, Bet Tycoon, [which has] two million installs on Facebook. [It] was the testbed for Crowdpark's future games [that the company] is now launching: AnteUp, 90Live and PetVegas.” Further, Nagel said that Earlybird believes that social gaming needs “new categories and strong vertical players to continue its rapid growth.” “Crowdpark is right in the middle of this,” he concluded. Last October, Crowdpark closed a second round of financing with Target Partners.