What Do Startup Investors Want To See?

By Victoria Duff

It’s a great time to start a business. The economy is in flux, your competition has been weakened or put out of business, and every turn in the business cycle brings on innovation and big changes. The time is ripe to develop and launch your idea.

Every startup needs financing. Sometimes the founders supply development money themselves and bootstrap their company. However, most startups need considerably more than the founders can provide and must find outside investors to add the rest. Investors come in three categories:

Friends and Family are the people who know you and are interested in your project and in seeing you succeed. Mom and Dad might invest just to give you a way to make a living and move out of their basement. Your friends might think your idea is exciting and are hoping to get a job with your company when you get it started. Your dentist might like the idea of keeping your business plan on his desk so he can point to it as an example of his prowess as a savvy businessman. Everyone in the Friends and Family group has a personal reason for investing in your company.

Angel Investors generally invest between $25,000 and $100,000. Some might even go as high as $250,000 if they think your project is particularly attractive. This group is interested in making at least twice their investment amount and can be very picky in evaluating your business plan, financial projections, and management team. If you seek money from Angels, you must have your pitch in great shape and your business plan detailed and your claims well-documented. These days, many Angels have Venture Capital experience and are very sophisticated. Many Angels find their deals on crowdfunding sites, so those platforms should figure into your investment search.?

Venture Capital groups are difficult to please because they see hundreds if not thousands of business plans and pitches in a single year. If you are looking for a million dollars or more, you need to understand what investors are looking for in a startup. Angels can be tough, but when you get to the larger money from VCs, your pitch and plan and supporting documents must be detailed, logical, and your product already tested if possible.??

When assessing a startup, investors typically focus on the following key areas:

1. The team: Is the team composed of individuals with the relevant skills and experience to succeed? Do they have a track record of success?

2. The market: Is the market large and growing? Is there a clear need for the product or service?

3. The business model: Is the business model sound? Does it generate enough revenue to sustain the business? How many revenue streams are there and what are the plans for expansion?

4. The competitive landscape: Is the startup fighting against established players with deep pockets? Is the market crowded with similar products or services?

5. The financials: Are the current finances healthy? Are the financial projections realistic and does the startup have a clear path to profitability?

In addition to these key areas, investors may also focus on other factors specific to the industry in which the startup is operating. For example, Venture Capitalists may be more interested in startups that are targeting new markets or technologies, whereas Angel Investors may be more interested in startups with a high potential for success.

All of these factors will be considered when assessing a startup, and the answers to these questions will help investors determine if your business has the potential to succeed. Ultimately, investors want to see a clear path to profitability and evidence that the team has the skills and experience necessary to achieve this goal. If all of these factors are met, then the startup may be a good investment opportunity.

Investors also want to see value in your company. How do you add value? What is the company's competitive advantage? How will the company's products or services impact the market?

By asking these and other questions, investors can better assess whether a startup has the potential to succeed and provide profits to shareholders. Ultimately, this is what investors are looking for when assessing a business. If all of these factors are met, then they may decide to invest in your company.

Patents, intellectual-property-in-development, and building leases may play a role in adding value to a startup. For example, patents may protect the company's intellectual property rights. Intellectual-property-in-development can help the company gain an edge over competitors by patenting new technology or developing unique products. Building leases can provide the company with valuable space to grow its business. All of these assets can add value to a startup and help it achieve its goals.

In addition, these assets can provide financial stability for the company. For example, a patent may provide the startup with revenue over the life of the patent, while a building lease can help cover costs associated with operating the business in that location. These assets can also add value to a company by helping it achieve its goals and increase shareholder value.

All of these factors should be considered when assessing a startup, and the answers to these questions will help investors determine if the business has potential to succeed. Ultimately, investors want to see a clear path to profitability and evidence that the team has the skills and experience necessary to achieve this goal. If all of these factors are met, then the startup may be a good investment opportunity.

What is your company's competitive advantage?

One key factor investors look for when assessing a startup is its competitive advantage. What makes the company's products or services better than those of its competitors? What makes the company unique? Investors want to see a clear competitive edge, and gaining this advantage can help a startup achieve success.

Some factors that can contribute to a company's competitive advantage include a strong customer base, innovative technology, a strong management team, and valuable assets such as patents, intellectual-property-in-development, or building leases. Each of these factors can provide the company with an edge over its competitors and increase shareholder value.

How will your company's products or services impact the market?

Another key factor investors look for when assessing a startup is how its products or services will impact the market. Will the company's products or services be in high demand? Will they solve a problem that is widespread? These questions help investors determine if the product or service will be successful and whether it will provide value to shareholders.

If the company's products or services are in high demand, this may lead to increased revenue and profitability. If the product or service solves a problem that is widespread, this may lead to increased market share and more customers. All of these factors can add value to a startup and help it achieve its goals.

What are the team's experience and skills?

Another key factor investors look for when assessing a startup is the team's experience and skills. Does the team have the necessary skills to achieve success? Are they experienced in the industry that they are entering? Do they have a clear path to profitability? All of these factors can help a startup achieve its goals and increase shareholder value.

The team's experience and skill level can be assessed by looking at the team's background and experience, as well as the skills that they have. Background and experience can be assessed by looking at education, work experience, and other factors. Skills can be assessed by looking at competencies such as engineering, marketing, or management.

All of these factors should be considered when assessing a startup, and the answers to these questions will help investors determine if the business has the potential to succeed. Ultimately, investors want to see a clear path to profitability and evidence that the team has the experience and skills necessary to achieve success.

What is the company's long-term outlook?

Another key factor investors look for when assessing a startup is the company's long-term outlook. Is the company focused on short-term profits or developing a sustainable business model? How committed is the team to continuing to develop and grow the business? All of these questions help investors determine if the company has a long-term vision and whether it will be successful in achieving its goals.

If the company has a clear vision and is committed to growth, this may lead to increased shareholder value. If the company is focused on short-term profits and isn't particularly interested in developing a long-term business model, this may lead to decreased shareholder value. All of these factors should be considered when assessing a startup's outlook and whether it has the potential to succeed.

What are the risks associated with the company?

Investors also look at risk when assessing a startup. Are the risks associated with the company manageable? Are they reasonable given the potential rewards? All of these questions help investors determine if the risk is worth taking on, and whether the potential rewards are worth investing in.

If a startup has high risks that are difficult to manage or aren't justified by the potential rewards, this may lead to decreased shareholder value. If a startup has low risk levels that are manageable and aligned with the potential rewards, this may lead to increased shareholder value. All of these factors should be considered when assessing a startup's risks and whether they are worth taking on.

What is the company's competitive landscape?

Another key factor investors look for when assessing a startup is the company's competitive landscape. Does the company have a clear advantage over its competitors? Are there any major challenges that the company will need to overcome in order to achieve success? All of these questions help investors determine if the company has a chance to succeed and increase shareholder value. If a startup lacks a clear advantage or is facing major challenges in the market, this may lead to decreased shareholder value. If a startup has an advantage over its competitors and is well-positioned to overcome any obstacles, this may lead to increased shareholder value. All of these factors should be considered when assessing a startup's competitive landscape and whether it has the potential to succeed.

What are the company's financials?

Investors also look at financials when assessing a startup. Are the company's finances healthy and in line with expectations? Is the company generating enough revenue to support its growth plans? All of these questions help investors determine if the company is capable of sustaining its growth and achieving its goals. If a startup isn't generating enough revenue or is struggling with financial health, this may lead to decreased shareholder value. If a startup is generating more than expected and has strong financials, this may lead to increased shareholder value. All of these factors should be considered when assessing a startup's financials and whether they are indicative of a successful future.

Overall, investors look at a number of factors when assessing a startup's outlook and potential to succeed. These include the company's focus, competitive landscape, risk levels, financials, and growth plans. All of these factors are considered when they are making an investment decision on a startup. If any of these factors seem concerning or suggest that the company may not be able to succeed, this may lead to decreased shareholder value. However, if all of these factors are positive and suggest a promising future for the company, this may lead to increased shareholder value. You should always expect investors to carefully assess a startup's risks and rewards before making an investment decision.?

If you have questions, feel free to contact me at 915-227-3154 or [email protected]