24 May Five Characteristics that Can Help Attract Investors
Whether your business is a new startup looking for initial investors or an existing company that needs a shot of capital, learning how to make your company attractive to investors is almost always a challenge.
Every potential investor places emphasis on different things. While not all professional investors are cut from the same cloth, there are some common threads that can provide clues for best positioning your business with potential investors.
Market Demand. You’ve probably put a lot of work into your numbers, but have you given the same attention to adequately describing what sets you apart? You might be surprised to learn that investors are just as likely to dig deeper into understanding your market niche, determining whether your pricing is accurate for the marketplace, understanding what drives demand, and learning how you stand out from the competition. Using your financials as the benchmark, ensure this component of your business plan and proposal is just as detailed and valid.
Experience. Investors may not express it outright, but most prefer an entrepreneur with an established track record of success. Does that mean none of them are interested in “discovering” the next 20-year-old tech genius? No, but most would prefer not to take a chance on an unknown. If that describes you, there are still ways to position your company as having “seasoned” leadership. Surround yourself with experienced advisors, preferably in official capacities as board members or consultants, and be sure investors are aware of these associations.
Character. Experience isn’t the only thing investors look for. It’s a safe bet that as entrepreneur, your character will come under scrutiny. Consider how well you convey positive character traits like commitment, tenacity, passion and flexibility. Are you able to demonstrate knowledge, yet an openness to learn from others? Remove any doubt from potential investors’ minds about your character.
Excitement. Investors want to get excited about your business risks are great. If they can build a valid path to growth and success, that sparks the right kind of excitement. Investors are looking for scalable companies. Don’t be overly aggressive in your growth projections to the point they become unbelievable, but by the same token, if your proposal is too safe, investors will see it as void of any chance at a large payoff.
Valid Business Model. Your financials may make perfect sense to you, but as much as you strive to stay objective, you are not likely to look at them with the same unbiased eye as a would-be investor. Despite the fact that the items mentioned above are increasingly important to would-be investors, that doesn’t mean less attention is going to be paid to the fundamentals. How does a potential investor see your business model? Expect investors to push the pencil on your numbers, questioning both revenue and expenses. Before they do, be sure your business model is sound and defensible.
Keep these simple truths in mind and you stand a better chance of attracting investors to your business.