When it comes to attracting third-party capital to a startup, entrepreneurs usually go wild to please investors. However, despite all the efforts, people are in no hurry to invest in someone else’s business enterprise, although it seems quite attractive from investments.
Moreover, very often entrepreneurs are refused, and without explanation. Today we’ll talk about what potential investors pay attention to when they are considering deciding to allocate funds for someone else’s business.
1. Dynamic market opportunities
How big is the niche your company plans to occupy? How vast is the addressable market? You must be prepared for the fact that the state of the market is determined not only at the moment but in its future.
If your business is not very original and you plan to take the market with existing business solutions, be prepared to convincingly explain to investors how your business is fundamentally different from competitors.
If the field of future activities will be a new emerging market, then the emphasis should be on how quickly and to what extent it can grow, and how you plan to grow with the market. Investors understand that the rising tides raise boats standing on the shallows, and prefer to invest small funds at the initial stage to receive decent dividends in the future.
2. Team performance
A potential investor will also study the capabilities of your team to understand whether it is capable of timely and fully satisfying all market demands. In what areas are your team members experts? Will their competencies make your business an authoritative market player? Does the team have additional skills, how is it related to sales and marketing, product development and innovation? Is the team united and can it act as a single organism for the benefit of a common cause?
We have listed some of the positions that potential investors will pay attention to when analyzing your team’s abilities. Take the lead and think about what qualities of your team are the most winning and present them as brightly as possible.
3. Commercial support
A great way to demonstrate reduced risks from investing is to take certain steps to start a business before the stage of raising funds. Demonstration of market interaction with your product and installation of feedback will distinguish you among those who ask for money for a business that exists only in theory.
The first steps of your business demonstrate not only its viability and prospects but also show your determination, desire to work, initiative and enterprise. Which will also contribute to a positive decision on the part of investors to allocate funds for your startup.
4. The relevance of investments
Do not underestimate the desire of investors to control the process of doing business. The person who invests in your company, quite possibly, will want to participate closely in the process of managing the company, give advice and even “customize” the business for himself and the requirements of the market. On the one hand, this is a normal situation, on the other hand, in the pursuit of monetary influences, you risk losing control or starting a business in the wrong direction you would like to develop.
The solution is to not grab onto the first investor who agreed to give you a certain amount, be ready to adjust his plans and desires by the advice and strategies proposed by the investor, but at the same time maintain a reasonable balance and not lose control of the business Pubg wallpaper. As soon as the investor sees that a competent person who does not shrug off his experience runs the business,
5. X factor
In addition to rational factors affecting whether they will give you money for a startup, several unpredictable arguments can affect the decision of the investor. What it will be: the same views on a certain moment in life, similar life stories, the same university or some example from the portfolio – it is impossible to predict.
All that remains for us is to advise you to keep yourself as natural as possible, not to be shy to speak, to prepare detailed information about yourself and to closely monitor the interlocutor during the conversation. The last paragraph will help to notice subtle signs of interest in one or another part of your presentation that you need to see, decipher, understand and develop to ultimately make a favorable impression about yourself and get the desired money.