Starting a business requires certain amount of cash to help the entrepreneur get the things going. While the most common advice entrepreneurs get is to bootstrap their ventures or use the help of friends and family for beginning, after some time the need for further investment becomes apparent. Raising money is not a piece of cake. There are many things that you have to include in your investor pitch, and to help you concentrate on the most important aspects, here we will highlight the seven critical elements that investors look for in a startup.
Investors look for companies that know exactly how to position their product or service in the marketplace. It is essential to understand your place: Are you going to solve a problem in a unique way, to fill a gap in the existing market or to create a completely new demand?
Investors look for companies that are easily distinguishable. It is extremely important for the investors to work with entrepreneurs, who are having realistic, backed with data through research understanding of the competition.
Investors look for companies that have the right timing of entering the market. Many startups have failed not because their products were not good, but because the timing wasn’t right. If the customers are not ready for your product or your idea comes out too late, you may still fail even though the other aspects of your business are falling into the right place.
Investors look for companies that are run by the right people. They value the leadership skills of the co-founders, their ability to work together, to form a team and to manage effectively their employees.
Investors look for companies that follow well-crafted and detailed execution plan. The execution of an idea is what truly matters. Ideas by themselves are of no value if they are not implemented well. By having clear goals and targets, it becomes easier for the team to concentrate on them, to monitor their progress and to set even higher goals.
Investors look for entrepreneurs, who have realistically valued their company and know how much equity they are going to give up for the targeted amount of cash. The pitching entrepreneur must know how much money they need for the specific fundraising round and have detailed plan on how these money will be spent.
Investors look for entrepreneurs, who are independent, but open for suggestions and guidance, who are willing to ask for help and advice when they need it. Entrepreneurs, who understand the power of mentoring and the importance of receiving assistance and help, are more likely to make better decisions. Entrepreneurs, who run their companies as a one man show are not flexible and often are driven by their ego.