What an Investor Wants to See Before investing in your Company
Being a business startup entrepreneur is somewhat difficult but what is more difficult about a business is making sure it is investable. A lot of people want to invest in a business but in other for a business to be invested in by investors, few criteria have to be met. This is not about looking for money for the business in fact, the business might not be in search for money but in cases where the business need investors or is going public, what are the few things that the business must prove to have.
Scalability
An investment is only made into a company that will keep making progress and selling. Scalability is building something that will keep selling without adding any or little extra cost.
Protectable
Investors like businesses that they will not have to fight over rights of owning a design, recipe, strategy or product. An investor will preferably invest in a business that has a patent which will keep the business, its products, design or services, or brand copy proof. A few things that should be protectable in a business are software, data, logo, Name, User network. An investor will be willing to invest in a company with a protected future.
Healthy Capital table
The people who come into your business can’t leave the business easily. An investor could decide not to invest in a particular company because of the previous investors. If you make a mistake to get the wrong investor into your team, you will definitely find it hard to take them off and it could cost a lot. Getting a healthy investor so as to bring in other investors should be your goal. Also, an investor is very concerned with how much shares of the company has been sold. If you are a startup, an investor do not expect you to have sold a lot of shares because doing that doesn’t give them a proof that the business is secured unless it is publicly traded. If a company has sold over 50% of its shares before bringing in vital investors, it might be really difficult for the company to stand in the future in days of downtimes.
Good Figures
If you are inviting an investor to come invest in your company, then make sure you got good figures. Figures of sales move investor as well as future plans which are feasible always make investors want to put money into the business.
On a final note; no matter how much you like an investor or want the money to grow your business, never give an investor up to 40% of your business shares. It is not good for the company as well as it is not good for the business owners which is you.
@tipu curate
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Why will an investor ask for 40% of a company's shares, that is ridiculous. Investing isn't outright buying.
Most new entrepreneurs are so eager to get their ideas to the public and because they have no support coming from any other place, they only choose the option they get.
@eni-ola first of all very nice article , if i would be an investor i will first cheek the profit whether they will be able to deliver profit or not.
That is one thing good investors do so they will not make the wrong choice.
That is one thing good
Investors do so they will
Not make the wrong choice.
- eni-ola
I'm a bot. I detect haiku.
Good tips and I thank you for sharing them.I want to add that another important factor is that the company has limited capital, because that shows that they will continue to fight to progress and do things better, something that does not happen when they have unlimited resources, because the tendency is that when they feel safe, they work and try less to achieve their goals.
Thanks for contributing @reinaldoverdu.
Excellent article. I particularly like the concluding part of not giving more than 40% business shares. It is timelessly true in the world of business.
Even if some investors like to take more, it is just the best thing to do.
Excellent article. I particularly like the concluding part of not giving more than 40% of business shares. It is timelessly true. Cheers!