6 Things Investors Look For Before Investing In A Start-Up

What Investors Look For Before Investing In A Startup ?

1) Passion and commitment from the start-up owner

An entrepreneur should not just be passionate about their business idea. 

They need to be committed and “in it for the long haul”. 

When an investment is made, the investor is also betting on the business owner—they are not only investing in the company. 

The investor provides the startup with more than just financial resources; they also provide their networks and skills. 

2) Unique and viable business plan

A start-up proposal should sound like a business plan, not just an idea, when founders propose it to the investor. 

It needs to be a feasible idea that can be put into action.

The company proposal should include something novel and creative. 

It should be anything that offers a fix for an issue.

3) Market opportunity

The market for start-ups is a difficult one, with many new companies failing.

Investors want to know the size of the overall market and the total number of potential clients.

The investor would hesitate to invest if the planned market size is insufficient since they might not receive sufficient profits. 

It must be remembered that the company should be sustained over the long term. 

4) Investor Relevance and the X-Factor

When making an investment, an investor would want to provide money to a business that they can relate to or that they can comprehend. 

They would like to invest in a startup that is linked to their experience or past investments.

In terms of funding, there is something referred to as the "x-factor." 

At this point, the investor and the startup owner have a certain chemistry, and as a result, the investor becomes intrigued by the project and agrees to invest in it.

5) Gaining Traction

An investor wants proof of concept in terms of the start-up’s engagement with the target audience and the customer base of the business. 

Startup business owners should support their ideas by providing accurate information and pertinent figures because investors will want to know how much money they will receive in return and how quickly they can anticipate receiving it.

6) Team Structure

Investors also look at the team that handles everything in the startup. 

They want to know how many members are there and what departments they belong to. 

Investing in a start-up is a big gamble – it can go both ways.

Hence, investors do their due diligence before putting in their hard-earned money.

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