Knowing the mind of investors is half the battle won in gaining sound financial backing.  Often, Startup CEO’s are so occupied with setting up their new businesses, that they tend to ignore the steps that would attract the right investors.

If you are among those in the absolute initial stages of setting up a fresh enterprise, knowing what investors want, may offer you an effective guideline for your business path.

Here are 4 main factors investors consider when choosing companies to invest in:

1) Profitable and Known Sector

Though this sounds like an obvious point, there is more to it. In the current business scenario, some sectors hold more promise than others. These include all e-commerce businesses, especially in Food and Beverage. IT & ITes, Consumer Goods and Housing Finance are some others.

You may also read: 5 Promising Sectors For Entrepreneurs and Startups in 2021

Another aspect is that specific investors prefer certain industries. They are well versed in the sectors of their choice so it’s important to check their individual portfolios before approaching them. Select investors with experience in your industry.

Investors prefer industries with high potential and a sizable market. There are a handful who may invest in a niche idea but majority of them like to see big numbers over varying demographics. They back companies that have the ability to grow fast and via multiple revenue sources, if possible.

2) Solid Business Plan

A detailed business plan with data and figures on the sector you are entering and your business. Well researched financial projections, sales and marketing roadmap, competitive analysis and a transparent investment structure will also help you to understand your business better.

Your business plan should also portray your expertise, vision and drive. These are vital qualities that investors look for.

Related; Do You Know The 5 Business Mistakes That All Startups Should Learn From

3) Acute Business Readiness

Refrain from approaching investors before you are 100% ready. You need more than just an innovative business idea to attract an investor. Naturally, a business plan is needed but even your location, team, manufacturing unit, and suppliers should all be in place.

If investors like you and your top team, they may even forgive a few business-related errors. Some may also advise you on how to refine your offering for better market traction.

A Startup with the plan to begin looking for an office, suppliers or employees after a few months, is not ready to land an investor.

Another quality related to readiness is possessing some related business experience and acumen. Investors elect companies run by skilled and qualified entrepreneurs with profitable track records in their earlier business, jobs, or academic progress. If you have no related experience in the business you are about to launch, either gather some work experience or do a related course to add value to your resume.

4) Competitive Edge

This point refers to the uniqueness of your product or service within a promising sector. Investors get impressed with any aspect of your business that will give you an advantage over other players in the same business line.

Whether you utilise better technology, innovative marketing strategy, product with better features or even unique licensing. A game-changer idea or an exclusive business model can also set you apart.

The current pandemic situation is giving rise to many creative business ideas that cater to evolving customer preferences while being beneficial to the environment. A new consciousness and level of awareness on our planet, is a perfect backdrop for an original idea with immense competitive edge.

As the business landscape evolves, investors are looking for new ideas with the potential to attract large market share, rapidly.

Do you have what investors are currently looking for?

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