Those who do not have their own capital or financial support from family or friends to start or develop a business should start looking for other sources of financing, such as investment. At this point, it is not enough to just be inspired by your business idea, but you must also be convinced that it is worth taking such a risk.
There is no single answer to what professional investors pay attention to. Everyone has their own individual requirements, but it would be wise for everyone to consider the following 5 points:
Tip 1: Show off your team's strength
The management factor is important for an investor when making an investment decision. The investor invests primarily in the work of the company's team and its skills to make the proposed business plan possible. A good team can achieve success even with an average product, and vice versa, an average team may not be successful even with a high-quality product.
A professional investor wants to know whether your team has the necessary experience in all areas that determine the company's progress (e.g., production, marketing , financial management ).
Not only technical, but also a combination of personal skills and different personality types makes a team effective. Does your team have a strong and charismatic leader who can convincingly communicate the company's vision and goals to customers, partners, and employees?
Networking is important for your company along with your team. Do you have any famous people among your customers? Or experts who support your company with their knowledge?
The investor is interested in how your team handles challenges. He also observes how you respond to advice and guidance, especially if you are a young manager and do not have much experience in business . To what extent do you share the investor's advice, if you consider his advice to be interference in your business.
Tip 2: Be convincing with a special product
A stranger should be able to quickly and easily understand the essence of your product. Therefore, you should always be able to convey your product's advantages, innovation, and potential to solve customer problems in a concise and concise manner.
An investor is less likely to finance a business idea that has already been presented on the market many times in a similar form. Therefore, you should be able to emphasize the uniqueness of your product, which can bring additional benefits to your customer. Show the investor how your product stands out from competitors and how it is superior to them.
Tip 3: Show that you understand your opportunities and risks in the market
A phrase like “our product is unmatched” sounds frivolous to an investor. Every company faces competition. Whether it’s the same or not, there will always be similar products on the market. Show the investor that you are informed about your competitors and have a deep understanding of your and your competitors’ strengths and weaknesses, and that you know exactly which segment and type of market you can target with your offerings.
Give the investor the impression that you understand market opportunities and long-term trends in production methods, pricing, costs, consumer behavior, and sales methods.
Every company faces risks. Those who don't take risks don't drink champagne. Investors don't like risky situations. If they notice that you are not aware of the risks and cannot find appropriate answers to the investor's questions in this direction, this will have a bad effect on you.
Tip 4: Present a compelling business model
Investors are interested in what the company's turnover will be in the coming years, what profits it will see, and what expenses it will have.
It is important to understand how measurable your business ideas are and how the company will be able to quickly and cost-effectively acquire more new customers and maintain their loyalty.
Tip 5: Establish a Cashflow and Financial Plan
An investor wants to see a profit by investing in your company, and as quickly as possible. With a good financial plan, you will give the investor an idea of what price and profit margin are appropriate for your products, what expenses will be incurred, and more.
Cashflow is an important part of a financial plan: how much money is coming into your company and how much is going out of your company. You need to prove that you can cover your expenses without an investor and that your company doesn't rely solely on investor funds to operate.
Investment is often a temporary event. Most investors want to sell their shares after a certain period of time. This happens when the value of the company is higher at the time of the investor's exit than it was at the initial stage of the investment. Your strategy at this time should be: show the investor that with his own money he can take the company to heights that he could not achieve on his own.
This topic was addressed by BPN Georgia's webinar on "How to Attract Investors, with the mentorship of Christopher Nieffler." Christopher Nieffler: Swiss entrepreneur and investor. With many years of experience in food production and making investment decisions. He shared his practical experience with Georgian entrepreneurs in finding investors, interacting with them, and successful communication.
If you also want to become a participant in the BPN Georgia program, receive advice from experts, and develop your business, join us today at 599 87 93 41.
