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How Investors Judge Startups Before Investing

How Investors Judge Startups Before Investing
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Need of potential investors become inevitable to support and strengthen your business effectively, if you are among startups or already running a business. But it is not so easy to persuade potential investors to take a leap of faith in you. Following mentioned things will let you know how investors judge the startup

Startup Idea

It is very important to present your Business Idea in a way that investors could relate it, try to highlight the USP of the venture so that it becomes easy for them to judge how beneficial it can be to invest in the venture.

Investors want equity ownership

Investors prefer to invest their money for a fixed commission of the business where they invested. They met all legal securities to reduce the risks to entrepreneurs. Their business empire fits between crowd funding and venture capital sources.

TAM (Total Addressable Market) is another big concern. Just because you're selling a product in a big space doesn't make you a billion dollar company. You need to execute and show you can capture a certain percentage of that market. If your TAM is too small it might mean your execution ability as a company might be lacking, or that there isn't much growth potential left in your current market.

Investors always prefer a strong team with fresh ideas

To attract the investors, startups need to have a team of innovative minds who can deliver excellent ideas while presenting your business in front of investors.

Revenue Model

Investors are very much interested in the revenue model of the startup

How unique or novel is your technology

Technology's importance is also a function of the people and tools necessary to make it. The resource market for essential components of designing and developing a product are very important to consider, given that any impact to this market could have huge ramifications on that company's ability to produce and ship products.

Maintain Transparency

While pitching your business ideas to investors, keep all the things transparent to avoid any kind of confusion in their mind in the future.

Share Future Scope of Your Business Model

Investors always prefer for a potential business & having huge possibilities of future growth. It should be easily assumed that your business model is futuristic, well planned and will deliver huge profit in future.

Every investor has their own approach, and every startup is unique. Many entrepreneurs struggle to get the funding they need to start or grow their business So keep these thing in mind so that you can easily get the potential investor who can invest in your venture.

 

Edition: December 2016

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