Getting funding from investors can be challenging for startups and small businesses. While every investor has personal preferences, certain criteria tend to matter most when evaluating potential investments. Understanding these key factors can help entrepreneurs highlight the strengths of their businesses.
Transparency Builds Trust
Being fully transparent about challenges or risks shows honesty and integrity. Trying to hide potential issues will damage trust and credibility. Investors value open communication, even around problems.
Do Your Homework
Research investors who are a strategic fit based on geography, past investments, industry experience, etc. Appeal to them specifically versus generic pitches. Understand how they can provide value beyond just capital.
Master the Details
Investors will ask tough questions on everything from costs to competition. Master details on your market, forecasts, operations, and more. Seek advice from other successful founders in your industry.
Show You’re Adaptable
Demonstrate you’re coachable and will adapt based on investor feedback. Balance commitment to your vision with openness to constructive criticism.
Explain How Funds Will Be Used
Outline your specific plans for putting investment capital to work in the business. Detail how purchases and investments will boost growth and profitability.
Your Competitive Edge
Articulate what makes your business uniquely positioned versus rivals. Explain how you’ll maintain advantages over time as competition inevitably arises.
Prove Traction and Momentum
If possible, show progress and customer traction prior to seeking funds. This could include minimum viable products, expert reviews, pilot tests, etc. Movement without investment is impressive.
Assemble a Strong Team
Surround yourself with a collaborative team with complementary skills and experience. Investors bet on people as much as ideas.
Create a Growth Strategy
Demonstrate that this is not just a small project. Outline a vision and plan to scale through internal growth, M&A, distribution, etc.
Commit for the Long Term
Convince investors you’re focused on growth versus quick exits or flips. Building an enduring company should be the emphasis.
Bringing these elements together into a compelling pitch requires forethought and preparation. But checking these key boxes gives startup founders the best shot at securing critical investment.