Five things every investor looks for in a startup

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For an investor, it is important to know what he’s getting into while taking a decision of investing in a company. No one wants to invest in a business which isn’t profitable and viable in the future.

Here are a few things investors seek in start-ups while taking the decision of investing:

A strong team

An investor looks at a start-up as a team which works together and not as a one-man show. The management team’s capabilities and history is very crucial for an investor because it helps him assess what the team is capable of doing in the future.

You might portray a very colourful image of your team but if an investor can break through the rosy portrayal and see the rifts and lack of unity in the team, he might not invest in your start-up even though he liked the idea.

Hence, it is crucial to have a strong founding team in which everyone is sure about their roles and responsibilities.

Related Post: How to form the right startup team

The business plan

The investor doesn’t know everything about your business so you need to let him know about the most important things like the break-even point, financial plan and the marketing and sales plan through your business plan. Because your business plan is a major factor the investor judges you upon, make sure it is made properly and consists of all relevant and required details.

Also, try charting milestones so that an investor has a better idea of your business.

Related Post: All you ever wanted to know about a business plan

Company’s uniqueness

If your idea is the same as the one being offered in the market, an investor will not be interested in investing in your business. He is looking for a unique idea which will appeal to the customers and give him enough profits. VCs often look for competitive advantage and propriety features over the financial structure.

For instance, the most unique ideas are often sponsored in Shark Tank over ideas which are done and dusted with already.

Related Post: Meeting with Investors – Before, During and After

Effective long-term Business Model

A start-up might be doing extremely well in the initial stages and making profits but what is important to judge is whether the business will survive in the future as well. A number of companies are closing down due to mismanagement of finances, low sales, no profits etc.

Amidst cut-throat competition, all an investor wants to know is if your business is likely to withstand the test of time and continue doing well in the future.

Related Post: 7 ways to build a successful startup revenue model

Growth potential

It isn’t enough to be a sustainable business; the company must also have growth potential because no one wants to invest in a company which is standard and stagnant in terms of profits. Your company should be able to growth at a fast pace and introduce new products and services to the mix and attract more markets in a short time. A potential market size is a great way of determining the potential growth rate in the future.

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