It’s not easy to second guess exactly why someone wants to invest in your company but you can usually take more than a fair stab at guessing – they love your product/service, they think you’ll be great at the helm or they are convinced there is a gap in the market for your proposition etc. There are a few reasons that come up time and time again though and here’s what they are:
● They like you. Not only do they believe they will be able to get on with you, but – more importantly – they trust you can do what you say i.e. bring the company to profitability.
● There’s not much competition. The sector you’re seeking to break into doesn’t pose much of a threat. As a result they believe there is a fair chance you really could be onto a winner.
● It’s their specialist industry. As I mentioned before, many investors prefer to put their money into an industry/sector with which they’re familiar.
● You’re located nearby. Some individuals understandably like to keep a close eye on their investment. To be able to do this they need the company to be located within driving distance.
● Precise costings. The value of your company, your sales projections, how many orders you currently have – they’ll want to know all these statistics and preferably on paper (ie not just from what you say).
● A definite spending plan. What you’re going to actually do with the money whether you’ll be investing in staff, equipment, marketing etc.
● Skills/talent quota. Who else will be working within your company and what skills do they bring to the table?
● Knowledge. Will you be looking for the investor’s expertise? If so, will you take that into account when it comes to the cost of investing?
Investors are individuals but chances are several bullet points from the list above will be crucial to the potential investor you’re about to go and meet. It’s always good to know where a funders concerns and interests lie and why they would be happy to hand over cash to a brand new venture. It’s never going to be something that they undertake lightly.