From an outside perspective, investing in business can seem a bit like gambling. But the truth is that most private investors are fairly risk-averse. They want to look for a solid opportunity that will provide a good return on their investment. So they’ll be looking out for some common things that will put them off investment.
Everyone wants to believe that their business will be the next big thing. And it might well be. But even if your business has the potential to be a multi-million dollar business. It isn’t one now, or you wouldn’t need investment. You’re asking for investment based on what your business is worth now, or what you can prove it will be worth in a short time-frame. Nobody wants to hear that you think you’ll be making millions in five years because you just feel it. If you’re asking for $50k for 5%, you need to show that your business is worth 1 million dollars.
A good percentage of business plans submitted to investors promise big returns but provide no evidence. If you’re promising huge growth or potential massive returns, you’ll need the numbers to back those up. Don’t make forecasts with your emotions. Make them with a fair and unbiased analysis of the fundamentals of your company and the market.
Investing is about People don’t invest in businesses. They invest in other people. Most investors don’t just want to put money into your business and sit back. They want to be involved in improving the business. Your business might be the best in the world. But if you are combative or difficult to work with, an investor might look into the future and see that the money might not be worth the stress.
Investors hear a lot of pitches before they decide to invest. You may be excited to throw around words like ‘innovative’ and ‘fresh’. But unless you can back that up, no-one will share that excitement. Every entrepreneur *thinks* their business is unique. You need to show it with hard facts and numbers. Research your market and show that you have a unique proposition.