Raising money is a big concern for most businesses. If it were easy, everyone would be doing it. You might have an amazing business idea, but unless you make your investment opportunity look attractive, your idea will probably go flop. Here are few things you must properly take care of before you approach an investor.
Proof of potential success
Primarily investors will look for the how much the business is worth their time. If they don’t see any proof of potential success, it’s obvious they won’t invest their time and money on it. The business ideas, current user base, market size, founder’s interest- all these together will make the investor take a decision.
Valuation plays a major role in showing how attractive your business is. You need to value your business in the right way. Sometimes, overvaluation or undervaluation of your company might lead you to lose investment opportunity. Though your valuation of the business might differ from what the investors are thinking- and that’s pretty obvious. But if it differs too much or if you have an odd valuation- it shows you haven’t thought much about it and thus lose investment opportunity.
Business model & plan
You need to exactly tell the investor how and where you expect to take your startup in the next couple of years. Your idea could be amazing, but unless you know what to do with it or where you want to go along with it and how long would it take for you to reach your goals. You need to show your investor a perfectly planned roadmap- to make sure you get his/her money into your business.
One of the first things, investor look up to- is the compatibility and skills of the team. If your team members are inexperienced and lack proper skills to complete tasks, you will lose investment opportunity. As much as your idea needs to be innovative, your team also needs to be strong enough to properly implement the idea and follow through an objective. Also, they need to be compatible and friendly among themselves. They will be spending lots of time together- it’s crucial that the investor sees the binding among the team.
Building trust among the founder and investor is very important. The investor needs to trust your character, judgment, leadership skills. There must be mutual trust between the two teams to get into a long term relation. In case you are keeping pieces of information which are crucial to decision making- investor will not show interest in your business.