If you are an entrepreneur looking to get investment from angel investors, or any other type of investor, before you start spending hours on the perfect pitch, you need to understand what it is that makes the investors tick. The difference between a successful pitch and an unsuccessful one might not be dependent on the business concept, it could actually be swayed by whether you are able to satisfy what the investor is looking for.
These are the top factors that your investors will be looking for from you:
Capability of your combined team
Investors won’t just be looking at your skills and experience, they will be looking at how the full business unit will be operating and whether you have all of the right people in the right roles. Having one weak area could significantly impact your chances of securing the investment you need, so make sure you get your perfect team into place before you go pitching for investment.
Opportunity in the market
The chances are that you haven’t just come up with a unique and innovative idea that has never been considered before, so your investor will want to know how much opportunity there is in your market. That is not just in relation to the current day market, any potential investor will want to be confident that there will be a dynamic market opportunity in the future too.
You will need to conduct enough research into the current market growth and projected market growth to persuade your investor that your business concept has what it takes to be successful. Part of this is to show them what makes your concept or approach different to other companies and the unique value proposition you are bringing to the table.
The most important factor in agreeing to an investment is to have a clear idea that they will see return on their investment, so you will need to put the financials together to show them how you envisage the growth trajectory to look like and how long it will take before the investor starts to make a profit from their investment.
Does it match their investment interests/strategy?
The majority of investors will only invest in markets that they understand and have an interest in. When investors are assessing whether to work with you, they will make sure that it suits their investment criteria. They might only be interested in one area of the market, the area that they are most familiar with, so that they can understand how your product or service will be able to succeed and make a good return on their investment.
One of the benefits of using angel investors is that you are able to use the experience and knowledge that they already have of the market. For many of these types of investments, investors act as a mentor, providing guidance that will help to ensure that their money is well invested. If an investor doesn’t have an interest in the market area you are pitching for, they are not going to be a good fit and are likely to decline the investment.
Commercial traction
Showing your potential investors that you have already made some headway with your business and that consumers are already showing interest in your product will support your pitch. If you have some stats to share, this will usually be very powerful and using comments and feedback from consumers will also help to show the investors that there is opportunity for traction.
You need to show the investors that you don’t just have a business idea that might or might not work, you want them to see that you have put lots of work into researching the competition and how good the opportunity is for you to make the business succeed. Most importantly, you have to be able to demonstrate what it is that makes your business model stand out against other similar ones that they could invest in instead.
Having a really solid business plan and pitch deck will be key to convincing your investor that you have done all of your homework and that you have the right people, the right strategy and huge motivation to make your business a success.
Rapport/relationship
One more important thing that will sway an investor, is how well you get along with them. This one is harder to prepare for, as it is more about personality and the connection you have with that person. It can come down to likeability, or simply that the investor sees something in you that reminds them of themselves or their experiences. If you have a common acquaintance then this can help to build up a rapport, or any other shared interest or experiences.
The investor will be looking for someone that they can trust to take the business forward, so showing confidence in your idea will be integral to this, as well as being able to articulate your business strategy in a way that will compel the investor to want to work with you. Most investors will be receiving pitches on a regular basis, so they will be looking to work with people that they enjoy working with for the long-term partnership.
You can use your pitch deck to introduce some details about yourself, basically detailing your story and background. If they enjoy your story, they will be more engaged with you and with the rest of your pitch.
For many startups, securing investment is the only way that they will get the opportunity to turn their business idea into a reality. However, getting investment is rarely easy, so a lot of research and hard work must be done before you even get into a room with investors to present your pitch. When you are developing your pitch, make sure that you factor in all of these things that investors are looking for before they make an investment, to stand the best chance of getting them on board.