Finding investors for your established business or startup idea is challenging. Whilst your idea might be solid, there are a number of factors that venture capitalists and private investors are looking for in an ideal startup investment. Here some of the main things you need to make sure you have covered, to give yourself the best chance of success.
1.Market Size for Your Product or Idea
This is definitely a case of bigger is better. Whilst many niche products have had amazing success after launch, products that cater to the masses are seen as more favorable in the eyes of most investors. Well before approaching the market for investment, start-ups need to get accurate data and statistics about their target market and be able to easily speak to the potential of their product or service within that market. Being able to do this, without skipping a beat will ensure that when you are asked these questions by either venture capitalists or private investors, about your market, that you can speak with authority and certainty.
2. Strength in Leadership
Having a great idea, or even a great start to your business's journey doesn’t always equate to interest from investors. One of the biggest factors that determine an investor's confidence in a startup's potential is the leadership team that is responsible for taking that idea or business to the next level. Not only that, investors are looking for a business to have a wide skillset internally to be able to ensure its ability to thrive in the market. From financial management, sales and marketing, product design, and engineering right through to network size and influence in the market, these are the skills that investors are seeking in a dynamic start-up leadership team. Before seeking investment, it is a great idea to build an internal skills matrix or map, and ensure that you are seeking to fill any major gaps your leadership team may have.
3. Early Successes
Most investors are wanting to see that even early on in your business lifecycle, that your market has responded favourably to your products or services, and that amplification of your ability to produce your products or service the market will result in amplification of this early success. Take note, along with evidential data of your success when bringing products to market, including social proof that the product is in demand. Any proven success that can be backed up with data is a great way to give confidence to potential investment partners that their capital will be used to bolster something that is proven rather than taking a risk on an idea that is yet to be tested in the market.
4. Investor/Startup Synergy
Just like any business partnership, it is absolutely vital that a start-up and its investors are aligned in terms of skills, expertise, and approach. There is no right or wrong here in terms of experience, industry expertise, appetite for risk, or plans for growth, however, it is vital that everybody involved is on the same page. Furthermore, looking for these synergies early on means that you are identifying what type of support your business needs, beyond cold hard cash. Most investors have a depth of experience and a broad network of contacts that can hugely help you in your journey. By partnering with people who have the right background, skills, and contacts you can amplify your growth a lot quicker than doing it alone.