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5 Things Investors Look For
If you want an angel investor to invest in your business, you must give them the information and numbers they want to see. What are investors looking for? In short, investors are simply looking for a return on their investment. To achieve this outcome, they look for a number of different things.
Background and Experience in the Industry
Investors are not only investing in your idea, but are investing in you. He or she needs to see that you are knowledgeable, experienced, competent, and trustworthy. They want to know you possess the skills needed to drive your business to success. Your management team should have individuals who have knowledge about marketing and selling products, manufacturing, managing people, and accounting.
Effective Business Model
- How does the company market or plan to market?
- What problem is being solved?
- What is the business model?
- What is the market like?
- Who are your competitors?
- What competitive advantages do you have?
- What makes your product or service different?
- How will investors benefit from investing?
- What is the company’s social media and PR strategy?
- What is the projected lifetime value of a customer?
- What is the cost of a customer acquisition?
- What is the typical sales cycle between initial customer contact and closing of a sale?
They want to know that you have the answers to all of these possible questions that could be asked.
Your product or service needs to be unique. Investors look for features that distinguish you from potential competitors and give you a competitive edge. This could include things such as a highly skilled labor, access to natural resources, cost leadership, a unique geographical location or technology. Competitive advantage could even include things like connections and having unique relationships in your industry that allows you to receive exclusive deals. These additional benefits will be unique to you and your partners. As long as your product or service includes one or more of these competitive advantages, investors will consider investing in your idea.
The final thing investors look for traction. You want to follow through with your ideas in order to build credibility and have investors trust you. These investors need to know that their investments are actually going to go towards creating a unique product or service. They want proof that you are going to use their funding to make it big. One of the best ways you can stand out is to already have traction because it shows how much you are able to do without the help of investors. It shows them that once you are able to fund your business venture, you will be able to do so much more. This credibility will allow investors to believe in you. You never want to risk your credibility to impress an investor. You should be completely transparent and show them that you understand the risk they are taking in investing in you.
There are a variety of ways to find investors including through other entrepreneurs, lawyers and accountants. You can also find professional investors such as angel investors, venture capitalists, and investment bankers. There are crowdfunding sites that allow you to raise money from the public for a more direct route.. No matter where you are looking to get investments, you should always adapt to who you are talking to. It’s important to keep in mind that investors are people too and they are looking for entrepreneurs with great ideas that have the potential of making a positive impact in the world. They go with their gut when they invest in businesses so it is important to give them everything they need to know to make their decision. Relationships are everything and you don’t want to risk your credibility to get an investment.