Decoding Investor Mindset

The startup ecosystem today is packed with a bunch of factors. Entrepreneurs, mentors, ideas, market conditions, business insights, and people, among others. However, the big question on many minds concerning the startup ecosystem is, of course, investment! So, today, we’ll talk about this much-discussed and dissected topic of an investor mindset.?

Let’s get down to the basics. What is an investment? According to Wikipedia: “Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time.” The key phrase here is ‘over a period of time.’ Understanding this tiny set of words is the key to decoding an investor’s mindset!

It’s not just about the flashy statements and showcasing a bunch of attractive numbers in a presentation. In my experience, an investor, first and foremost, looks at the longevity of whatever they plan to invest in. The long-term impact of investment far outweighs any short-term gains or wins. To elaborate this, here is a set of factors that you should envision long-term when it comes to onboarding investors.

Internal factors: When it comes to betting on success, people matter most. The one who has the vision, and those who follow that person to make that vision a reality.

●??????You have to present a strong front, showing that the people who will carry the bulk of the weight forward are in it for the long haul.

●??????Keep in mind that an investor is looking for quality and constancy in you and your team.

I have seen that, at times, a founder will focus solely on presenting their own stability and vision while engaging potential investors. While this will appease a certain aspect of what the investor looks for, it is often not sufficient.

●??????You cannot shoulder the entire vision, for long, all by yourself. Any new venture is by no means an easy feat and a solid investor knows this.

●??????Make sure your team is as sturdy as you are, and showcase this strength visibly.

External factors: While internal factors are much more in your control, there are external factors that can be challenging to bring together. The product or service on offer needs to have steady and long-term demand.

●??????What kind of market are you targeting?

●??????How large an audience would there be to consume the service?

●??????Are there other competitive products or services that can potentially dissipate interest in what you offer?

These are but a few examples of the questions you’ll need to have answered reasonably well. You are focused on answering them in terms of making your venture successful. An investor, on the other hand, is also thinking about how long these aspects can be maintained. Making a profit is fantastic, but how long can you continue making a profit? Sustainability - that’s the difference you need to cater to in your approach to potential investors.

Cheat Sheet into the investor mindset: The internal and external factors I mentioned above are just the basics! What more, you ask? I’ll tell you. These elements I’ve captured from my interactions with successful and exceptional investors could give you an edge.

●??????Seasoned investors know that the plan can and probably will go awry. Yes, it’s true, they do. What they expect is that you know it too, and have a strategy in place to tackle it. You cannot know everything, yes, but anticipate that you will need contingencies. This kind of approach allows investors to see that you’re ready for the long term.

?

●??????Smart investors accept risks but don’t obsess over them. Risks are a part of every situation, be it a startup or an established business. There will be ups and downs, but seeing the downtime through is the key to long-term survival, both as an investor and an entrepreneur. A smart investor doesn’t stutter or get paralyzed when the business gets rocky. That is the time for patience and that is where character is most essential.

?

●??????Investors often look for one discerning quality when they’re considering investing in a venture – conviction. More than hearing about what we call the ‘valuation’ of a project, a shrewd investor wants to understand you, your story and your journey. When you have the belief that your venture will be successful, you tend to move forward and set more milestones. Highlight this conviction in your interaction with investors! It does make a highly positive impact and could be the tipping point in landing a solid financial partner.

I hope I’ve shared some useful insights about the investor mindset with this article. With this, I’m wishing you the very best in your fundraising pursuits!

#startupcommunity #startupfounders #startupfunding #investor #linkedincommunity