Eight questions companies ask when considering making an investment in a start-up

Eight questions companies ask when considering making an investment in a start-up

In the highly competitive world of investments, having a clear idea of what companies are looking for is essential to standing out from the crowd.

When going after funding for your start-up business, you can never be too prepared to face investors. They want to feel totally confident in you and your business and will therefore want to know every detail about what you’re offering and why it would be beneficial for them to invest. With this in mind, Lex Deak, serial entrepreneur, Dragon’s Den winner and Founder of www.trybasket.com, which has just raised £2 million in funding, has noted some important questions that companies consider when researching investment opportunities:

Has the opportunity been communicated clearly?

Investors are incredibly busy, so the key to grabbing their attention is to be clear and concise. Succinct language, pictures and charts go a long way, and make sure your deck, homepage and plan are coherent and easy to understand.

Is the sector interesting?

Most investors work in a narrow field, so ensuring you’re in the right space is vital. It’s also important to show that your start-up is in an interesting, growing sector. Positioning yourself on the right side of a growth area with something unique to offer can give you a great advantage.

Is this the right team for my investment?

Companies will be looking for a well-balanced team with the right number of founders – typically two or three – and will want to know what stage you are all at in your careers. A group of 20 year olds have all the time and beautiful naivety in the world, while those in their 40s likely have more experience but also a family to take up their time. They will also want to know that you have the knowledge and drive to make your vision happen, so confidence in your business and team is crucial.

How well progressed is the product or business?

You should be pitching your start-up differently based on what stage your product or business is at.  If you’re pre-launch, you should be selling a vision of the future and your ability to manifest it. If you’re post launch, investors will be focused on the narrative around your metrics, as well as what you’ve learned so far and your plan for growth.

How likeable are you?

Investing into start-ups is all about human assets. Are you the sort of person that somebody will want to have a business relationship with long term? A great personality can go a long way.

Which other investors are already involved?

FOMO in early-stage investments is a big factor. If other investors are already interested in your product or business, you will be even more alluring to companies who want a piece of the pie.

What overlap is there in your business networks?

Leveraging existing relationships in your sector can be a great help when looking for investors. Look for opportunities to get warm introductions, support from other business owners in your field and new connections.

Are you well-prepared?

Is the ask and valuation realistic? Does it seem like the right balance of dilution? Do you have enough resources to get the job done? These are all considerations investors will be thinking about.

If you have answers ready for all of these questions, you will be in a great position to pursue funding for your product or business.

Alexi Deak
Alexi Deak

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