What Do Investors Look For? (2024)

Hoping to fund your business through securing capital from angel investors or venture capitalists? It’s a smart move and one that has paid off for millions of businesses in the past.

Before you start setting up meetings with investors, you need to make sure you’re ready to impress them with your business pitch.

But how do you do that?

What are investors looking for?

A Management Team They Can Trust

You might be surprised to learn that you as an individual and your team are amongst the biggest driving factors behind your ability to acquire investment.

Investors understand that businesses are built on people: The work they put in, the experience they have, the drive they show to succeed. You won’t win your investors on charisma alone, but without giving them a reason to trust in you, investors won’t even look at your business proposal.

Experience in your industry is a key factor, as is knowing your figures and being confident in yourself and your idea. Show your investors you are the right team for this project.

A Bulletproof Business Model

Once you've gained trust in your team, you need your investors to trust the business. A vague idea of a structure and a lot of big words and promises aren't going to fool anyone.

Investors are after data.

They’re looking for your research. They’re looking for your analysis on competitors, and suppliers, and marketing channels. They also want to know about potential problems or obstacles, and how you’ll react to them.

Thoughts and feelings count for nothing in an investor meeting; only facts will sell your idea and land you the investment you’re after.

The most important thing?

Investors are looking for how you plan on making money — or more specifically, how you plan on repaying their investment. For this, you need to know the costing of your business, and where the profit margins are. You need projections of revenue, and to know where your opportunities for growth are.

This will take a lot of work to prepare, but investors want nothing less than total clarity. Enter a meeting with an investor feeling confident and ready to answer any question they throw at you, and you’re in with a good chance of securing investment.

A Spending Plan

Your investors are looking for you to know two things:

• How much money you need
• How you’re going to spend that money

There should be no ambiguity when you enter your meeting with an investor as to what is happening with their precious cash. Why they should hand it over to you is covered by convincing them to trust in your business plan and your team, but exact details on the amount of money you’ll need and how this cash will be spent are also essential for completing the deal.

A Thriving Marketplace

An investor’s key driver for giving you money is to make even more money. They’re not going to be enticed by the prospect of entering markets that aren't active and buoyant. You’ll struggle to sell an investor on the idea of getting involved in a consumer base that’s either small or not spending.

Investors look for opportunities in markets that are currently thriving and growing at high rates. Drive them towards your business with exciting market data and show them the possibilities of your market should they choose to get involved.

Make it an offer impossible to refuse!

A Unique Selling Proposition That Gets Them Excited

Your Unique Selling Proposition (USP) is an integral part of selling to your customers. Investors are hungry for ideas with the potential to be runaway success stories and your USP is key to that.

Investors are all looking for the next Amazon, but how can they get an idea of which businesses are going to explode with popularity?

Oftentimes, they’ll look at your USP.

Your USP effectively tells a story. It gives your voice definition in a sea of other business opportunities and prospects. A great USP is the mark of great potential; weak USPs inspire nothing but questions and doubt. There might be hundreds of businesses very similar to yours, but your USP can make you stand out.

Craft a strong USP you can take to investors to captivate their interest, and you’re more likely to secure the funding you need.

For more information on how to create your USP, read our USP guide.

Business Valuation and the Terms of Investment

Your investor will want to know what your proposed terms of investment are.

These go beyond simple methods of repayment. They’ll want to know exactly what they’ll get in return for their involvement. To offer these terms, you need a valuation of your business. For example, suppose your business valuation is projected to be £1 million and you’re asking for £200,000 for 20% of the company. In that case, you need to be able to show the investor that your business is worth £1 million and the terms of investment are fair.

Fail to consider your business valuation and terms of investment and you could undersell your value for investment. Or, you could request an unreasonable sum of money and put investors off the idea of working with you.

Are you in the position to start seeking investors, or do you still have some work to do on your business plan? Download our FREE roadmap to business success and see how far along you are in your journey.

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