Many entrepreneurs get anxious when it comes to raising outside capital for the first time. The process is not for the meek, as most investors are experienced and tend to be diligent in reviewing opportunities presented to them. Despite the wide variety of startups they see, the truth is that they are several boxes that just about every investor likes to check before they’ll invest. Here, we take a shot at breaking down what investors look for;
- Team’s execution capability
A potential investor will keenly look into why your support system. Is it well positioned to build and implement a plan and become a market leader? What kind of expertise does the team have that makes them an authoritative figure in the market? Does the team have complementary skills as it related to sales and marketing, product development and operations? Is there a strong chemistry on the team and does everyone play nicely with each other? It is important to have a team in place, each team member with different expertise to play a unique part in the puzzle.
- Dynamic market size
How big is the addressable market that your company is looking to serve? Big is defined in terms of not just today, but the future as well. Targeting a large market is the best way to inspire excitement in investors. Investors will have few worries about passing on an investment that will struggle to grow beyond a million of shillings some day; but an opportunity elegantly addressing a billion shilling market is one that even the most cautious investor will consider carefully.
- Right Fit
As an entrepreneur, you’re looking for investors that are the right fit for your business, and investors are looking for essentially the same thing in reverse: businesses that are the right fit for their investment portfolio. The best way to determine whether your business is a good match for investors is to look at investments they’ve made in the past and see whether there’s symmetry.
- Numbers are very important
How many people have you engaged? How big is your audience in terms of customers? Is the public aware of your business venture? Numbers are very important. When your business commands’ a huge following, the more likely for an investor to consider funding your idea.
- Competitive edge
If an investor is familiar with your industry, they probably know of at least a few competitors for your business, and if they don’t already know, they can find out quickly. Before they invest in you, they will want evidence that you have some significant advantage that the competition cannot easily overcome. Maybe you have unique relationships in your industry that enable you to cut deals with partners that no one else can match. Or maybe you have a unique patent on a new product that can secure your position as a market leader for years to come. Look for some key leverage points in your business model that will convince investors that you can build a sustainable competitive advantage, and touch on those virtues early and often.