Beginner Training Tips: What Investors Want to See in Startups

If you understand and can press all the “shortcut buttons” that are linked to the investor mindset then you can create a business model and a presentation that will take your socks off. Remember, this is an “ideal case,” but the closer you get to it, the more powerful your tone will be.

The oportunity

The market must be huge, growing, urgent, lasting and, preferably, not intervening. Think about the characteristics of a great market opportunity, obviously as a cure for cancer, instant teleportation or some other important breakthrough. Remember, the demonstrable need of the market comes first before designing the solution. Do not be a “problem-solving solution.”

Solution

Your invention must be non-obvious, patent pending (best yet), elegant, highly effective, disruptive (to competition), profitable, widely acceptable, immediately usable and highly satisfying. You should support a strong “bottom-up” forecast for sales.

Acceptability

You have already made sales or reserved pending orders. You have several market channels in place. You’ve collected testimonials from powerful and trusted allies and users. Can you make your customers “hook” with your products and love them? Can it become a “phenomenon” like the iPod or the iPhone?

Cost-effectiveness

It should be “profitable and profitable” from the first sale. Your cost reduction plan should be based on new designs, new technology or better manufacturing process, never on volume alone. Positive points in cash and cash should pass quickly after the market introduction. Should be able to keep the company only with profitability, but build it faster in new rounds of foreign investment.

Competitiveness

Competitors must be “asleep at the moment of change” or use an obsolete business model. It should have a large “entry barrier” to the competition, which may include R & D time / cost, cost of tools, unique relationships, special materials, unique know-how, etc. Can your solution put you in a “toll” position? with customers and competitors?

Scalability

There must be a clear and long-term plan to continually bring new versions to the current marketplace to increase sales and build momentum. New areas of application for products based on basic technology and experience will expand their exposure and sales. New channels and industry partners can deepen their market penetration. This is how local business investors in Pakistan expect to see the return on investment of all growth opportunities.

Impulse

The faster the history you can show in terms of important accomplishments, sales made, products developed, the more exciting and credible your story will be.

Sustainability

You should have good answers for all “what if” scenarios. Find out where the “model breakers” are and what you would do with them.

Business structure

Your capital structure should be simple and clean. It should have little or no debt or other obligations. I should not have granted or taken any license or right to do business. You should not have long-term contracts other than customer requests or other advantageous and exclusive relationships.

Management team

Your team should be anchored by a strong visionary leader who presents well and can tell a captivating story. You should have a group of experienced and complementary executives who are already on board or at least “waiting in the wings” for the funds to arrive. They must generate great confidence in being able to meet the milestones and take the company quickly to profitability.

Commitment

How much “skin in the game” do you and your team have in this company? How long can it last with little or no external funding, and how will it then grow?

Smart entrepreneurs understand exactly what investors want to see and then adapt their business model and tone to surpass their expectations.

Leave a Reply

Your email address will not be published. Required fields are marked *