Startup investors are looking for the next great opportunity, an innovative company with a potential for high profits. Do you think your startup has this potential?
If you’re looking to secure funding for your business, you need to understand what attracts startup investors. Find out the top 10 things investors want in their next opportunity, and learn how to highlight these traits in your own business.
1. A Market They Know And Understand
Familiarity is generally the safest option. Startup investors are searching for opportunities in sectors that fit their expertise. By choosing a sector they know, investors reduce the risk of losing their investment. They already have an idea of how businesses become profitable in this industry, and what it will take for your business to yield a return on their investment.
2. Strong Leadership Teams
When a leader has had success in the past, this indicates that they have the potential for success in the future. To secure startup investor funding, show that you have smart, strategic, successful leaders. Highlight the competency of both your company founders and leadership team. Leverage your leadership team’s professional experience for increased investor interest in your startup.
3. Investment Diversity
Often, startup investors provide funds for a number of companies to diversify their investments. How does this work to your advantage? When you show that investing in your business is a unique opportunity with a high potential for growth, you will differentiate your company from others. If your company provides investors with an opportunity like no other, they are likely to be interested in investment.
Investors do not want a company that will be stagnant. They want to invest in startups that will thrive, and eventually provide a return on their investment. Your business should be built with scalability in mind. Building a company that does not scale is one of the most common mistakes startups can make.
When client needs arise, your startup must be prepared to grow and meet them, and you must be able to show this potential to investors.
5. Promising Financial Projections
Show investors when they are projected to make their investment back and the promising possible dividends for the future. While it is not easy to accurately project your gains 5 to 10 years into the future, your leadership team must demonstrate to investors that the potential for growth is there. Back up your potential with a financially viable business model. The more time you spend perfecting your financial projections, the more comfortable startup investors will feel about getting on board.
6. Demonstrations Of Consumer Interest
When you invest in a company, you want to know that it has potential in the marketplace. Show investors proof of consumer interest in your product. Have you sold your product to anyone yet? Have you polled your persona base for their interest? Show investors that your product has a built-in market, and how that makes turning a profit a possibility.
7. Clear, Detailed Marketing Plan
Whether you are starting your business or you need to secure startup investor funding to get to the next level, investors want to see a marketing plan that demonstrates two things: you know your audience and you know how to reach them. Present your marketing plan for investors and show them the different channels you plan to use to increase your visibility in the market.
While revealing the complexities of your startup to investors probably isn’t completely necessary, you do want to be as transparent as possible to increase their trust in your business. No startup investor wants to enter a deal when they do not feel like they have all the facts. Be open and honest about the state of your businesses, the challenges you are facing and how you plan to overcome them.
9. Realistic And Reasonable Startup Costs
Over-projecting the value of your startup repels potential investors. Ensure that your startup costs are reasonable for your size and current client base. Demonstrate that you plan to use startup investor funding wisely and reasonably. Do not overspend on purchases that are not necessities.
10. Long Term Vision And Plan
Where is your startup going? Investors want to get on board with a startup that becomes the “Next Big Thing” in the future. What do you want your startup to ultimately grow into? Do you want to service a worldwide market, instead of your current local market? Do you want to employ 50,000 team members and have your product in every household? Paint a picture for your potential startup investors of where your company will be in future and make them optimistic that you will achieve these goals.
Attracting startup investors to your company is a necessity. So, you need all the pieces in place to show that partnering with your business is a smart move. Highlight the best parts of your startup and share your challenges openly. Investors will get on board when you demonstrate you have a high potential for growth.
Want to learn more about how to make your startup a financially appealing option for investors? Schedule a free consultation now.