What Investors are Really Looking for?

November 3, 2021

One of the challenges startups or entrepreneurs face is getting funded and they have every right to feel that way. They are basically asking someone for their money to fund an idea that you have, that may and may not work. It’s a big deal. Also, the unavailability of having a proper investors startup matching platform that really connects them in a way that is beneficial for both. So what really investors are looking for and how you can grab their attention.

1- Having the Proper Industry

Innovation is important and especially if you are aiming for a new industry that doesn’t exist yet or already do but still in its early stages. This has its pros and cons. Few investors would fund new ideas that have a new industry. They want to invest in industries and fields they understand and comprehend. Before engaging an investor, check its portfolio and what industry they normally invest in. This will save you a lot of work.

2- Management Team

Having the right team is as important as your billion dollars idea. Investors spend a lot of time in due diligence investigating the team and the management. If the team feels unqualified for this business, investors are more likely to bail.

You need to show confidence and experience in managing the company and achieving the goals you pitched to the investors. You are basically being entrusted with their money. They need to know that you have what it takes to turn ideas into actions.

3- Niche and Market Share

Investors are more likely to fund startups that are scalable and sustainable. They won’t be that interested in an idea that may generate millions. They want to fund the next unicorn, especially if a startup is asking for tens of millions of dollars. You need to have a competitive edge, especially if you have existing competition.

Investors get hundreds if not thousands of requests and emails asking for funding. Most likely they won’t even go through all of them and if they did, they’re probably would take a lot of time to get back to you. However, if the idea and its potential caught their attention, you are in for a treat. Make sure your idea can generate a lot of cash because no matter what others tell you, that’s what investors really look for.

4- Market Validation

Having a market validation and traction with little resources goes a long way to attract investors. This shows that the idea is verified and has the potential to work. If you can manage to get traction then investors are more likely to throw these terms sheet on your table before you blink. Make sure to have this in your to-do-list. Nothing more attractive to an investor than an idea who is already getting action before it has its big funding round.

5- Your Pitch Slides and Financials

A financial roadmap and proper projections are a must before approaching an investor. VCs see tons of projections and financials almost daily. Make sure you have yours properly done. Be realistic about your projections and have the cash flow plan prepared. Investors want every detail regarding expenses, projections, and other financials.

6- Establish a presence at investors startup matching platform.

It’s always great to establish a solid profile and presence on investment websites. There are tons of them. Websites like crunch-base, seed-invest, and many others.

Do your research!

To be able to achieve a successful startup, you will need to do thorough research and develop an understanding of your industry, competition, and customers. The biggest advice we can give you is DATA. Get as much data as possible about your idea, its potential, and even the investors you are planning to approach. Everyone thinks their idea is worth billions, but only proper data research can verify data.