December 7, 2018 Last updated December 6th, 2018 1,709 Reads share

What Are Potential Investors Looking for in Start-up Businesses?

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While a business undoubtedly needs passion, determination backed up with a solid business idea in order to succeed, it is also often, unfortunately, the case that money is also high up on the list of necessities to getting the business off the ground. Having the idea is one thing, getting the funds together to turn your idea into reality can represent an entirely different challenge. With traditional funders such as high-street banks increasingly wary of lending to small businesses, never mind start-ups with no trading history or customer base, many companies are turning to external investors to provide the capital needed.


Although it goes without saying that you need to have a solid business idea, investors also need to see that you have a workable and viable plan underpinning it, as well as being convinced as to your own personal attributes and your ability to lead the business to success. Positioning yourself and your business correctly can make all the difference when it comes to securing that all-important injection of capital. In order to do this, you need to know what it is an investor is actually looking for in a start-up venture.  Here are some key areas potential investors will be interested in:


  • A good idea – Central to securing investment is having an idea for a business, be that a product or a service which satisfies a need within the marketplace. Many people believe this needs to be an original product which fills a gap in the marketplace, however, this is not necessarily true. Many businesses have been borne out of taking an existing product or service and amending this in some way to make it better. Regardless of what your idea is, ensure firstly that there is a market out there for it and secondly that your product is able to meet these potential customers’ needs. Before pitching your idea to an investor, ensure you know your product or service offering inside out. Expect investors to probe you for additional information and be ready to answer these questions as confidently and as thoroughly as you can. If you are unsure how to respond to any question, be honest and admit that you have not yet thought of this point. Afterward, make it a priority to address this issue so you will be better prepared for your next pitch.


  • Planning ahead – A well-thought-out business plan is vital. This should not only show what it is you aim to do in the short and the long term, but also give consideration to competitors and how they are operating. Look at what they are doing well and consider any areas you feel you could do better. Evaluate how much of a threat they are to your own success and lay down the ways you will hope to mitigate these dangers. Financial information should include start-up costs, funding requirements, as well as financial projections including a cash flow forecast. While consideration should also be given to areas such as marketing, product development, logistics, and after-sales service. Don’t be daunted by putting together your business plan; this is your chance to shine and present your idea to potential investors. You do not need to use any specialist or legal terminology; write in clear, concise, everyday language which is easy to follow and makes clear all the points you want to make. Remember, investors are people too and would rather read a document which gives them the vital information they need in the most concise way possible. You can put together your business plan yourself, however, when it comes to the financial information, it is advisable to have this information compiled by an accountant to ensure it is realistic and based on more than wishful thinking.


  • Sell yourself – When looking for an investment you need to sell not only your business idea but yourself as well. Investors typically take a back seat when it comes to the day to day running of the business. While some may be happy to offer you guidance or advice, ultimately you are the one who is going to be responsible for the success of the business, and an investor needs to be convinced that you have what it takes to execute your plan effectively. Show your passion and enthusiasm for the project, as well as your professionalism and dedication to make it a success. You can demonstrate this in a variety of ways. A good one which you may not be immediately obvious is to consider contributing thought leadership pieces to relevant publications. This often requires very little to no financial output and building up a reputation as an expert in your field reflects well on yourself and also your product. Not only does this generate valuable publicity but it can also indirectly put you in front of potential investors. By actively seeking out these sorts of opportunities you are portraying yourself as a forward-thinking as well as a tenacious businessperson who understands the industry they are operating in.


Seeking investment can seem a daunting prospect, however, you should remember that the process is a two-way street. Although it may seem as though the investor holds all of the cards, they need you just like you need them. While you need the investor in order to get your business off the ground, investors are also on the look-out for attractive start-ups to put their money into. When you are sitting down with or otherwise pitching to an investor, they want to see you succeed; investing in businesses is how they make money after all. If you can present them with a unique concept, backed up by a viable plan, and a clear target audience, then you are in with a good chance of being offered investment.

Written by Gary Addison; a director at Redundancy Claims UK. Gary advises company directors on issues related to director redundancy, employee redundancy, and statutory entitlements.

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Gary Adisson

Gary Adisson

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