Have you ever wondered what investors want? What do you need to prove your idea will work and how can you get funding?
Every investor has unique requirements and will be looking for something that aligns with their personal interests and pursuits, there are a number of things you should consider if you want to stand a chance at getting funded.
1.The Right Industry:
According to Wyn Lydecker, a business development consultant, both investors and venture capitalists want to invest in businesses and industries that they understand. As a result, it is best to tailor your pitch and cultivate relationships with those who are interested in your industry.
Investors frequently advise or serve on a number of boards. As a result, they have little time to learn a new industry and make contacts within it. A simple online search should reveal your investor’s interests as well as the companies in which he or she has invested.
2. The Team:
If your investor is a match with your industry, believe it or not, the next most important thing is you and your team. If you’re the type of person they can see themselves working with, you’ve won half the battle. For venture capitalist Paul Suster, it’s not just the individual; the “management team” is essential. “If I feel that the CEO can’t cut it I’m highly unlikely to invest,” he says.
3. Traction:
A bit of traction is a great way to pique an investor’s interest. It demonstrates your ability to see your ideas through. For investors, traction minimizes risk.
To demonstrate traction you might need to recruit a good management team.
4. Cash Flow And A Financial Plan:
It’s not hard to see why this is important because really, this is at the heart of every investment. If your business is without the potential to make money, it is not a business.
An investor seeing a good return on their investment is key. An exit strategy is not your plan for when the business fails, but rather, your strategy for returning money to investors. This is one area that you can expect investors to seriously evaluate, so be thorough when planning.
In summary, investors are looking for the following four characteristics:
- An industry with which they are familiar
- A Management Team They Believe In
- A company that has gained traction or momentum
- An idea that will generate revenue
