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Factors to consider before approaching a Potential Investor

What do investors look for?

The majority of entrepreneurs share a trait: they are completely enamored by their own business and product. They are zealous, energetic, and upbeat. They can't wait to tell others about their revolutionary concept and/ or product. However, before that can happen, they must consider which factors motivate the investors who can help power up their engine.

According to StartupNation, every month, 543,000 new companies are established in the United States, but only a small percentage of these new ventures receive investment from investors. As per studies, venture capitalists only finance 0.05% of startups, while angel investors fund up to 0.91%. In other words, the average young startup has a less than 1% probability of obtaining seed capital from an investor.

If you're looking for meetings with professionals who have the power to write large checks, we suggest you go through this whole list. Following these recommendations will assist you in obtaining funds and forming beneficial alliances.

 

1. Do your homework.

As your own best and biggest promoter, it is up to you to do a thorough analysis and seek out investor partners that are a good fit for your business. If you ignore your research obligations and begin pitching to random investors in the wrong sector, it will be a waste of their time, but it will also be a waste of yours. The more tightly your company aligns with a prospective investor's investing background, the more probable, your pitch would be met with a positive—or, at the very least, constructive—response.

 

2. Follow a strategic planning process.

You should have a firm grasp on the following main elements:

  •     Market size and growth
  •     Target market 
  •     Customer profile 
  •     Your unique value proposition 
  •     Your product roadmap 
  •     Competitive landscape
  •     Your plan over the next 12, 24, and 36 months
  •     Your main milestones, especially in the next 18 months

You should now have a rough understanding of how you can make profits, including the profit margins, customer development costs, average customer satisfaction, and operational expenses over time. Without this foundational awareness, raising outside funds from angel investors or venture capitalists is nearly impossible.

 

3. Create a strategic financial model.

The outcomes of the strategic planning exercise serve as the foundation for your business strategy. Over the next three years, the average strategy forecasts a quarterly financial model. As a result, it does not have a very clear view of costs for the next 12 months.

However, in order to better grasp your company on a level that helps you explain it to a prospective investor, you must dive down to a monthly financial schedule for the first 18 months. You must be able to accurately articulate the money-making plans.

 

4. Create an investor pitch deck and presentation.

Now that you've gathered all of the relevant statistics, you'll need to craft a pitch that demonstrates why they're important. Your pitch should be brief yet comprehensive, descriptive yet convincing, and, most importantly, unforgettable.

The presentation you make should outline the company's story – who the market is, what challenges they have, what your approach is, and why your solution is the best. Complement the pitch with an eye-catching pitch deck. A strong pitch deck is required to stimulate investor interest prior to the initial pitch.

During your investor conference, though, your deck will add personality to your pitch, assist the crowd in following along, and demonstrate your startup as you deliver your talk. To be the best, you must first defeat the best, because when it comes to gaining support, it all begins with the presentation.

 

5. Create and hone your elevator pitch.

Reduce the executive overview even more to an elevator pitch. Assume you're on an elevator ride that could last anywhere from 30 seconds to two minutes. During this time, consider how you would specifically explain what your business does, how you want to win in your target market, any of your specific clients, and the comparative edge your product provides over the market competition. Work on this elevator pitch and become confident in your plot. Don't read the lines aloud. Allow your enthusiasm to shine through at all times.

 

6. Final step

If you've completed all of these measures, you'll be able to comfortably walk into every investor's office and pitch them. Nothing should get in the way of reaching your fundraising target if you have a good team, a decent product-market combination, the best plan, and a flawless presentation.

It can take a few attempts before you meet THE ONE who is enthusiastic about what you have to say. However, if you constantly strengthen these six measures during your fundraising trip, you will be one of the few who triumph against the odds! For further assistance, you can contact us at www.simplifiedmarketplace.com and get greater insight.

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