It is very good to source for investors when starting a new business. However, one of the things you quickly discover is that you are not the only one with great and sound ideas; neither are you the only one who needs funding. Most people will, rather than developing the idea into a plan and strategy, they jump out looking for funds to finance the business. They then begin to complain that people or banks are not interested in helping businesses.
Investing in businesses for investors is not an easy task, especially for new businesses. They have to think about the risk related issues and long term investment factors before investing and that is why they prefer confident and adaptive start-ups. Listed down are some important factors that investors look for investing in: Ultimately, any investor would dig deep into a start-up and looks for the following factors before investing in any start-up.
The number one thing that investors get their checkbooks out is for momentum. Everyone has their own definition of momentum (user numbers, revenue, channel partners, biz dev deals, whatever). But the reality is that this nebulous term people talk about that they “need to see traction” really just means that they’re not ready to invest in your company. Why? Chances are they don’t know you well enough and can’t judge your performance or capabilities. Some have “rules”. Everybody breaks them for the right deal.
2. Market size
Any investor would like to receive bigger returns and hence they want to ensure the addressable market size and the style of approach of the start-up they are investing in. Investors look for ventures that can achieve momentous profits with decent financial projections and maintains its impact on the targeted market.
Investors particularly look for highly experienced entrepreneurs as they believe these entrepreneurs know how to minimize risks related to start-ups. Maximum investors take interest in those start-ups which have experience of high performance and executing correct business plan so that they can turn their investment into their expected ROI.