When you are an entrepreneur looking for investment, it is a good idea to have more in your back pocket than just the firm belief that you and your company deserve the investment. For all intents and purposes you might well have the best idea since Oculus Rift, however, investors want to see a lot more than just an idea alongside firm belief.
So, what gets investors excited and wanting to invest?
You, the entrepreneur
When an investor finally signs a cheque for you, they’re not just buying into your idea, they are buying into you as a person. So when you meet an investor for the first time you must be able to give across the impression that you are experienced, wise and serious about business.
No investor worth their salt would ever invest in anyone who comes across as inexperienced. If you don’t have the experience yourself, make sure you have an older, wiser and more experienced entrepreneur alongside you; otherwise you’re unlikely to attract investment.
You and your team
Investors will want to investigate not only you, but who is working for you as well. After all it won’t just be you doing all the work; investors need to understand who they are supporting and be able to trust in your team to do the work required to make the venture a success.
Investors will be on the lookout for entrepreneurs and teams that exhibit passion about the company vision, as well as ultimate commitment to the project. Commitment can be shown by personal investment by those involved, either in monetary terms or by the pure amount of time that’s been invested trying to get the venture off the ground.
Entrepreneurs and their teams should be able to prove they have the sheer tenacity to back their dreams and ideas, as well as the stamina to stay true to their vision throughout the downs, not just the ups. Flexibility is another characteristic investors will be on the lookout for; no investor wants to invest in an entrepreneur or team who are unwilling to adjust or re-evaluate as necessary.
Investors will want to see that you and your team have the skills and knowledge required to make the venture a success, and at the same time see where they can make an impact and provide valuable coaching. They will also want to see that you and the team are ready and willing to be coached in certain aspects.
Ultimately, they will need to see an atmosphere of teamwork; no one wants to invest in a team that doesn’t, or won’t, work well together.
Customers will always be one of the most important factors affecting investment. After all, if you don’t understand your customers, how do you expect your venture to be a success? Make sure you know the answers to the following questions before you even approach an investor:
– Why would someone want to buy your particular product or service?
– Does your product or service solve a specific problem?
– Why would someone choose your product or service over an alternative?
– Why is your product or service worth the price you’ve valued it at?
– Are your customers interested in investing in your venture?
Your business plan
You must understand that even if your business idea is the best thing since sliced bread, if you haven’t done the planning and you don’t have the numbers, your idea simply won’t matter. Investors will laugh at you (once they’ve finished shouting at you).
You need to ensure your business model accounts for everything. Every single pound that will be spent, every single revenue opportunity must be accounted for or projected. This is the real world, and you’re asking investors for real money, so you need to be prepared with realistic figures.
To have the best chance at securing investment, try to show that your venture will be profitable, repeatable, expandable, predictable and defensible. Ultimately be honest and if you have trouble mapping your business model out to show all these things ask for expert help before going to see investors.
Opportunity and timing
When investors make their final decision about investing, a lot of it comes down to whether or not they see an opening in the marketplace. Is there space for the venture? Is it the right time for the product or service to be released?
Investors want to be part of the next big thing. Ideas that will change the world and have a huge impact on people’s lives. That is what they want. Investing carries such huge risk that investors just can’t afford to invest at the wrong time.
You need to make damn sure that you’re approaching investors at the right time and that you have the knowledge, market research and statistics to back it all up, otherwise you’re wasting your time!