Investors are an important need for most startups. They help by pitching in the money and creating a sturdy kickstart to the project. Big shot investors also help in gaining some kind of audience and status. So what are the things that attract an investor to convince them for their investment?
The main attractions that investors look for before investing are
This is the most important and one of the things that an investor would calculate. They could never invest money where they do not see the potential of a return. So you are next to give them numbers and guarantee a return for them to invest. Make sure you crunch the numbers and prove to them their investing will return them.
You will need to have a very solid and strong business plan. You can not simply attract an investor with a “go with the flow” attitude. So you need to have a rock-solid business plan, which includes,
- Your intended market, with data to show why that market is your target
- Data-based, hard number financial projections.
- Sales channels, with data to show why those channels will be effective.
- Marketing plans and goals, with data to prove.
- Analysis of the competition for your product or service
- The projected timeline for when you will start making a profit.
- Potential obstacles and your plans for dealing with them.
This is one important factor of your business to attract investors. Your business idea should be unique and have potential. Even if you have an amazing business plan, if the main idea is weak then it is going to be hard to find an investor. You need to convey to your investors what it’s so eye-catching & worthy to invest in.
If an investor has to choose between two similar products then they would choose depending on the story of those products. You are likely to buy a product if it supports local farmers than similar products which do not.
Have an interesting and bold way of proposing your idea. You need to tell them why you started, why this business project has to be released. Investors are people, after all, so need to try to move them by showing how special a product you have.
The audience you intend to serve also has a key function. You need to make sure it is a large and stable audience. You need to make sure the targeted audience is constant and not for the least amount of time. The more stable and larger your audience is, the better your business proposal will be.
You would need to have a clear investment structure. A calculated estimate of your share, the investment share, and how much is left for other buyers. You will also need to have made important decisions and rules like if the investors get to vote or decide business plans and changes. There should be a complete “handbook”, what happens if the investor wants to sell, add more investment or reduce, and even if they want to back out. All loopholes must be tightened and proposed to the investor.
TYPES OF INVESTORS
Personal investors involve investors like your friends and family. They usually do not need to be convinced very intensely and they are ideal for small businesses.
Most popular, these are investors who put their money on businesses and companies. They help kick-starting brand new startups and help in the initial stages.
These are the investors who invest in startups holding long-term growth potential. They are usually financial institutions like well-off investors and investment banks.