Ever since Dragons Den hit our screens back in 2005, even novice entrepreneurs have understood a thing or two about the importance of investors. Crucial for providing the capital necessary to truly get an idea off the ground, experienced investors can also assist with business plans and expansions that make it far less likely your startup will be among the 50% that fail to get past the five-year mark.
The trouble is that, in a startup market that’s grown by as much as 95% in prime business locations like the US across the last two years alone, finding your one true investor is harder than it ever has been. And, as you’ll know if you’ve ever watched the entrepreneurs squirming in front of Debra Meaden and co, it wasn’t exactly easy to start with.
Luckily, as the viability of startups increases alongside advancingly volatile markets elsewhere, move investors are now looking to break into this area. The trouble is that a great many appealing startups are still vying for the attention of every single investment prospect. As such, finding points of difference is really the only way to secure the investments you need, and largely rests on your ability to shine in the following ways.
# 1 – Leadership with a difference
The right leadership team can do a great deal to tip the scales in the favour of any startup through investor eyes. Silent investors will especially look for a strong leadership team of passionate founders with knowledge in their subject, and a drive to pass that knowledge on to happy teams. They’ll most likely determine this strength by asking –
- Whether you have relevant in-house skills/experience
- Whether you have the industry connections ready to expand and succeed
- Whether you’re creating a positive, strong, company culture
Outside of your expertise or potential, an investor considering a large investment will also want to understand the alignment of your management team in general, and also the fallbacks for future success even if, for whatever reason, you were out of the picture.
In large part, proving these points depends on your ability to create a workspace consisting of the best possible talent across a company culture that employees are clearly happy with (competitive benefits, flexible work arrangements, in-company training, etc.). It’s also crucial to develop a startup around your specific area of expertise or at least taking a little time to develop work experience/industry understanding before taking the plunge. After all, while it does happen, it’s unlikely for an investor to take a risk on an entirely unversed entrepreneur dipping their toes into an industry that they barely understand.
# 2 – Innovation that leads the way
With clear links having long been made between innovation and profitability, investors are also likely to look for innovative companies with strong points of difference. Obviously, true innovation starts with your product idea/service itself, but this fast-moving market also requires ongoing steps towards innovation, including expanding points of difference, collaborations with Research and Development teams, and beyond.
Luckily, there are government grants to bring these focuses within easier reach even during the early stages of a startup, and R&D tax credit specialists are perfectly poised to help you to easily afford all of the innovation you need to truly stand apart from the crowd. Then, all you need to do is make sure that you’ve got the ideas, passion, and team necessary to bring these sometimes outlandish business ideas to realistic fruition. Even if innovation itself isn’t enough to seal the investor deal, your prowess in terms of making the seemingly undoable work will certainly prove a testament to your skills, and your worth as an investment prospect with true potential.
# 3 – A sizable existing market
In the vast majority of cases, investors will wait until a product has already been on the market for some time before they take the plunge. This is so that they can ensure the viability of a product before taking unnecessary risks, and gives them a chance to see existing business plans come to fruition through sales figures, consumer interest, etc.
Obviously, developing the best (and most innovative) product possible is the only real way to boost those figures on the ground, but investors are also increasingly able to track the size of both existing and prospective markets through simple considerations such as your social media following. Admittedly, numbers here don’t necessarily correlate with sales but, if your brand page has a mere 150 followers, it’s unlikely that you’re even close to feasible investment regardless of what you do elsewhere. By comparison, a brand page with 10,000+ followers is far more likely to garner positive attention, while companies approaching the 50,000+ mark are unlikely to have trouble securing investment relatively quickly.
# 4 – Achieving the ever-elusive ‘spark’
As you will have also seen from Dragons Den, the simple reality of investment is that you could have an amazing product, a substantial following, and a leadership style to beat all others, and you may still fail to secure investment for the simple fact that there’s no real ‘spark’. This can be a frustratingly vague way to talk about a matter that should ideally be fact-based, but the reality is that, if an investor isn’t passionate about what you’re offering, they probably won’t care enough to put money towards the cause. To overcome this, you must make sure to target investors with an existing interest in your field by researching around questions such as –
- What area does the investor most commonly work in?
- What companies have they already invested in (if any)?
- What innovations have they developed themselves?
- Do you have any common connections/interests?
- And so on
These seemingly simple considerations, thought to be irrelevant by far too many entrepreneurs, are really where investor-based love at first sight comes in, often regardless of any efforts you’ve made elsewhere. So, what are you waiting for? It’s time for you to find the spark with the investor of your dreams.
