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2021-03-12 /

What Startup Investors look for

We all need a little help, and that’s applicable in running a business. Whether it’s about handling operations, getting marketing advice, or even raising funds, a little aid would go a long way. Fortunately, startup investors exist to help budding entrepreneurs reach their goals. But what exactly are startup investors looking for in businesses? Let’s find out.

There are a lot of brilliant solutions to the world’s myriad of needs. These solutions could just be marvels waiting to happen in someone’s basement. And to make these things happen, certain generous individuals dedicate a part of their career to startup funding.

Essentially, startup funding is where budding entrepreneurs showcase their business to potential investors with the primary goal of raising capital. These could be done by means of one-on-one engagements or startup launchpad events, also known as crowdfunding.

Money is one of the major challenges that hinder startups from growing. Even when you have a product you think solves many problems, a shortage of funds takes away multiple opportunities. Such opportunities include revenue, commercial success, and supremacy attributed to your niche.

While you could work your hardest to continuously sustain development and production, time will be your enemy. Once you see that your business needs some stacks to move forward, start looking for startup investors.

What are Startup Investors?

They may be called different names but there is only one goal: help startups become successful by aiding them financially. Startup investors, also known as Capital or Angel Investors, are individuals with significant net worth who help budding businesses financially. Simply, these are the rich people you will convince to invest money into your business.

Certain qualities of a startup investor include earning at least $200,000 annually and are already established in their business ventures. Aside from finances, they could also help your company through coaching or advice in strategies and management. Being a startup investor means they have solid experience in the nitty-gritty of running a business. Because of that, it’s not very easy to get a startup investor to invest in you. 

With that much at stake, they will take their time in making sure that your product has the “IT”-factor and sustainability. They will be inquisitive about your business organization, operations, and marketing plans. Additionally, they have every power to scrutinize your product just to make sure that it sells. You need to have specific qualities that will make them want to bank on your tank.

What do Startup Investors look for in Startups?

Just like in The Voice, startup investors need to hear that “Eureka!” moment about your business that they’re looking for. There are certain qualities a startup possesses that attract investors to bet on them. Indeed, these characteristics should allow the investors to see the potential that lies ahead once they start the funding. 

These are the hard-to-miss qualities that startup investors always look for.

1. That X-factor

First and foremost, your business has to have that extra edge over your competitors. This becomes a primary motivation for investors to really grab a hold of your business. There should be something unique and cutting-edge about the things that you do for them to bank on.

It could be anything from the product execution, your talent pool, or the product or service itself. When you talk about that special something to an investor, there should be that feeling of affinity that ties your goals together. Overall, it’s the zinger about your startup that would cling to their interest in investing.

2. Company talent and capabilities

Most of the time, your best asset is your organization. The people and teams you are working with can help sell your business propositions to potential investors. As mentioned, investors will be interested in everything that relates to your business, people included.

They will be interested in the people building your products or services and execute the plans you have laid out. If you equip your organization with competent experts who have reputable portfolios, investors will likely bank on you.

For example, you own a software company and offshore software developers from the Philippines. The Philippines is one of the best countries for offshore software development. Thus, this gives your company the credibility it needs to convince investors to help finance your business.

3. Vast market opportunity

Time and time again that we stress how vital startup marketing is. You should emphasize what makes your product marketable. Additionally, you should look into what opportunities you can penetrate once you launch your product in the market.

In this note, you should properly assess your product and where it stands relative to its market. 

  • Does this product already exist? If so, what makes it stand out from the rest?
  • Is the market for this product already saturated? What can I do to make it stand out?
  • Are we venturing into a new market? How sure are we that this market has a customer base? etc.

Startup investors will be looking at this area probably more than the others. Why? You should be able to see revenue and return on investment. There should be an assurance for them that your product is fit for the market, leading to sales. 

4. Concrete business plan and exit strategy

In business, all great things transpire when they’re properly planned. After all, there is no substitute for a venture whose directions have been identified depending on its performance.

First, you should lay out your business plan, both short-term and long-term, for investors in a pitch deck. This should give them an insight into what’s also in it for them. How long will they be funding until you’re profitable? What position do they hold in your company as an investor? How will you execute your plans? How much do you really need from them? The answers to these questions should populate your deck.

Finally, create an exit strategy. This does not mean that your company is bound to fail. Actually, this would give the startup investors an idea regarding your preparations, however, the cookie crumbles. Failing to set things up is a setup towards failure.

investor criteria

They’re Looking for Marketability and Capability

Like what a good business should be, yours must be a walker and a talker. Seek the perfect balance of having great people capabilities and high product marketability. Overall, both qualities summarize the key factors startup investors are looking for.

Fortunately, you can find investors with our help. At Full Scale, we equip startup software companies with talented individuals as important assets. From product development to marketing, our pool of talent will elevate your marketability with their expertise and capabilities.

So, if you are looking to give your business the X-factor that investors gravitate towards, go and shoot us a message. Get your free consultation today!

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