What do investors want?
- Clarity regarding how funds are used: In some cases an entrepreneur has too many projects/ideas (which can be both good and bad) but the company needs to initially be a lot more laser focused. It’s good because it shows the entrepreneur may be willing to “pivot” or adapt to the best potential opportunity. However, it can be bad if it’s distracting and causes the company to lose money.
- The path to revenue/profitability needs to be more persuasive
- The growth/sales strategy needs to be more persuasive
- Milestone based funding to reduce the investor’s risk
- Committed entrepreneurs: For example, full time and some cases they have skin in the game.
- The upside is explained clearly. For example, creating: a) High growth company (eg. user acquisition b) Creating a cash flowing company c) Creating valuable intellectual property that can be licensed
- Regulatory/compliance risks
- Barriers to entry
- Risk controls (this is a big category). For example:
- Budget/cash flow decisions are controlled
- Manager/operator do business in a jurisdiction with a good legal system in case something goes wrong
- The team’s interests are aligned. You want to ensure that the company can focus on building great things instead of worrying about whether they believe they are fairly treated
- Strong management team that works well together
- Great product(s) and/or services
- Proof that they can get the job done and problem solve
- Proof that they can overcome pressure (eg. some investors prefer entrepreneurs that have had setbacks) so that they know that they are dealing with a resilient entrepreneur
- Selective and skilled at setting priorities
