When it comes to raising capital from the investors, startup owners or entrepreneurs often get anxious. Despite the fact that the investors see a variety of startups, they still check several important things before they invest money and time. Below are six important things investors look for-
The Startup’s Business Plan
The business plan of a startup is a significant factor behind the startup investment. No investor would like to waste their money on a startup if it isn’t a good one. If you have a good business plan and know how you will spend the money, it offers better pitching opportunities. Therefore, it is crucial for a startup owner to keep the business plan handy and make necessary changes.
How Efficient The Team Is
An investor also looks into how well the team is positioned to create or execute a business plan and become a leader in the market. What domain expertise the team has? Does the team have adequate skills related to product development, sales, marketing, or other business operations?
Do the team members effectively communicate with each other to execute the plan? There are many more criteria the investor will consider. Thus, it is beneficial to highlight these as strengths.
Visibility And Traction Of The Startup
Showing the investors that you are not merely a talk, but you have also begun taking action to boost your business. Also, show that the market is engaging with your products and services. Provide useful feedback to set your business apart from the others.
Highlight the real-time data about the customers acquired till date; it will help stimulate the investors’ mindset. It will also bring trust among the investors about the startup company. It proves that the startup founders have put a lot of effort into making the business work.
As a startup owner, once you identify the investors, it is a great idea to find a connection with the firm. Investors receive hundreds of investment pitches, and then a connection happens. But, if you get introduced by a mutual connection, it is like icing on the cake.
Whether it is from social organizations or professional associations, look for personal contacts with the firm. Also, look for a contact with the investor and see if you have any mutual contacts on the networking sites.
Another thing that plays an important role in deciding the startup investment is ‘compliance.’ A startup company that is not compliant with the legal rules doesn’t seem appealing to the potential investors. Many startups fail to raise funds only because of non-compliant activities.
Moreover, as the government is getting more and stricter on the non-compliant companies, it is crucial to maintain proper documentation and perform the daily activities that comply with the Company Laws. Even if the investors look at the startup database, they want to ensure that the company is legitimate and comply with the rules and regulations.
Investors’ relevance has many aspects, including the stage of your startup, the type of industry your company is active in. If you find multiple connections between your startup and the investor’s strategy, the investor will engage better. This way, it improves the chances that the investors will invest in your startup.
To Sum Up
Though the fundraising process is a daunting process, you can engage a good investor and put yourself in a good position. Even if you don’t get an investment quickly, you have done your job nicely.