Entrepreneurs need to understand what investors look for when investing in a start-up or business before looking for investors. In order to attract investors, you need to know what they want from your startup. Read this article all the way through if you want to know what investors are looking for in a startup.
Creating a start-up requires investors, so you should register yourself with Venture Uplift, and here you can pitch lots of investors who will invest in your startup. Due to the expansion of technology and the creation of start-up companies, the market environment around businesses is fast-changing, and "start-up investment" is gaining attention in order to foresee further company growth.
Many people, on the other side, are concerned about initiating startup investment, citing examples such as "new companies have difficulties making investment decisions" and "there are no human resources who are knowledgeable about startup investment." As a result, we will discuss some factors that an investor checks when investing in a business or start-up so that entrepreneurs easily attract investors for their start-up businesses:
An investor first checks out an upcoming start-up to see what problems you are solving, whether the solution is already available or not, and therefore you need to solve any problem no one has solved before.
Here are seven steps to follow while solving a problem:
Determine the problems.
Recognize that everyone has a different set of interests.
Make a list of potential solutions (options)
Consider your options.
Choose one or more choices.
Keep a record of the agreement.
Contingencies, monitoring, and assessment should all be discussed and agreed upon.
A potential investor looks at the size of the total addressable market of the problem you are trying to solve. A platform that targets and solves the problem of many people, on the other hand, will have a huge impact, and so the total addressable market size will be large.
To attract investors, you should explain the characteristics and benefits of your product services in a way that:
It emphasizes your product's individuality.
It explains how your product solves the problem in the most effective way possible.
You must provide a captivating, thrilling story about your product's features, benefits, and distinctiveness.
You must explain to your investors why your product is unique.
Investors evaluate this factor before investing in a company. You must ensure that your team has all of the characteristics of a successful team, and it would be beneficial if you informed your investor of the following:
Each team member's responsibilities
Members of the founding team
Newcomers in the first round
Investors look at your company's performance during the last two to three years. As a result, you must take care of the following:
Customers' opinions with the product
The influence and transformation that your product has on people's lives are examples of product consumer benefits.
Investors love hearing feedback because it helps them figure out how your product's story can have a big impact. The greater the impact, the more investors will be drawn to your company. Aside from the anecdotes, investors look at the statistics.
You'll need it to explain revenue growth in the previous three years, superhit products in the previous three years, gross profit in the previous three years, net profit in the previous three years, and locations covered in the previous three years.
If you want your product to flourish in the market, you should develop it based on the feedback you receive from customers. On your website, customers can provide you with feedback. Feedback is also effective on social media platforms such as Facebook, YouTube, and others. It incorporates a proper improvement cycle based on client feedback. They are interested in the changes made to your product as a result of consumer feedback because the customer is the one who will pay for it. Investors are well aware that your first product will never be your last.
In order for a business to be sustainable, it must achieve a positive cash flow. The first thing you need to figure out is how your business is going to make money, how it's going to generate revenue, what kind of expenses will you have and how much will they be?
While reaching out to investors, you need a deep understanding of the following points:
Money-making model of your business
Next year's plan
Net 3-5 years plan
Rather than asking random questions, you should explain to any investors all the answers to these three questions in great detail:
How many funds do you require from the investors?
Where are you going to invest those funds?
What is the outcome of the investment?
The investment results show the investors your seriousness when you explain your exact needs, how you will utilize the funds, and the use of the funds. Funds can be used for technology, team building, product development, production, and marketing/sales.
Investors can examine the following factors based on the eight explained above:
Company valuation
The potential of your company
An investor will value your company based on the quality of your workforce and your story provides clear and transparent information to investors.
Investors are interested in your company because they expect bigger returns than fixed-income investments. To maintain investing in the business over the next 5-10 years, investors desire a 5X-10X return on their money. I'm sure you gained a lot of knowledge from this article.
Before investing in any start-up or company, investors look for this. So, if you appreciated this content, please forward it to your entrepreneur friends. So, if you wish to pitch to an investor, you can do so by registering with Venture Uplift.
