What Characteristics Do Investors Look For In a Startup?
Do you know –What exceptional things are required for becoming a good startup Entrepreneur?
On what factors you need to prepare for raising money?
Well to be honest after working with many entrepreneurs and interviewing them, I have observed that there is always a vision and tenacity behind every successful startup brand.
There is a consistent pattern that takes to thrive and survive this journey.
Believe me, there is no magic formula for entrepreneurial success. It’s just that you need to earn their trust and win them over.
If you are not sure if you are on the right path just go through these 6 characteristics and know what investors are going to look into your startup.
Let’s get started.
1. Feasibility of Your Business Model
Always think about the feasibility of your business model. Is it going to work and achieve in every condition?
Aim to scale your business every year to generate revenue without increasing operational costs.
So, to attain this present a proper business plan through a cost breakdown.
Design a strategy to reach your customers either online or through retail stores and address your goals properly.
Additionally, do consider before running into a partnership, S corporation, C corporation, or LLC (limited liability corporation).
Most investors prefer C corporation as it allows easy transfer of preferred and common stocks.
Even Venmo was (mobile payments company) was initially built by Andrew Kortina and Iqram Magdon-Ismail with the idea to connect musicians with mobile-savvy fans.
They were later confused if a similar model could work for mobile payments. They reached out to their customers asking them to improve their solution.
Later on, they developed a mobile payment app that was able to make $9billion by 2017.
2. Team and Skilled Entrepreneur
Mark Suster (Managing Partner of UpFront) quoted-
“For any investor, it takes a miracle to get investment dollars out of them if they’re not impressed with the team”.
The team behind your startup is going to define your future.
Try to sell your idea on traits such as hard work, passion, determination, focussed, and trustworthiness.
Your team should have talented minds with different skills like business strategists, marketing, and technology expert.
Another important thing is the previous experience. If you lack similar experience highlight your skills and education.
Ultimately it should indicate that you are capable enough to run a business.
Most startups have to show that their product or service is marketable.
They must do a prior assessment to see if their idea is feasible enough to convert into a multi-million dollar venture.
It should be able to achieve some degree of traction (a value that is going to return you revenue).
You should be aware of the solutions that are needed to modify your product and the target market that is going to buy it.
Keep the momentum to get into the checkbooks of investors.
4. Market Size
The product that you are going to sell should have a big market demand. It won’t work if it is limited to specific demographics or areas
It should serve the majority of the public with less competition.
So, you should have a proper vision for your brand that can capture the market.
For instance, Airbnb and Uber never expected to steal customers from hotels.
Eventually Uber turned into a big logistic company for the transportation of private individuals.
So, make sure you have some facts and metrics to demonstrate why your product will be a big hit in the market.
5. Uniqueness of Product
There has to be something unique about your product that should set it apart.
If you are coming with a similar product then you can either improve its quality or reduce the prices.
For instance, MVMT watches came up with timepieces that were affordable with higher quality.
Remember if your product is unique and you are pitching to an investor then you will raise enough to get to the next round easily
Therefore prepare your business plan for a real and unique business idea.
Every startup owner should have an idea of the worthiness of their business.
Valuation of your startup will include sales, physical assets, employees, future projections, and intellectual property.
It will also include how you are planning to invest in the capital of investors.
Just calculate and establish a price by comparing the examples of startups that have received funding.
Let them know when and where you are planning to invest their money with the profits that you are going to earn.
Don’t just look for the rumors on odds of getting funded.
You can have that potential to position yourself for success and become the next big entrepreneur.
Always prove to them that you have got what they are looking for.
So, with the above characteristics, you can build trust and a healthy partnership and scale up your business to the next level.
Claire Mark is an investment and strategic planning consultant at Alcor, a global investment bank. She’s best known for her insightful blogs on business growth, startups, small businesses, and investments. Claire also has a good network in the Finance industry, especially the investors’ community. Apart from her work, she loves to bake and go out for gadget-free nature walks.