What's going on inside an investor's head?
If you're an entrepreneur with a reasonably early stage business, you're probably thinking about raising investment for growth at some point in your journey.
You're might already be talking to angels and wealthy individuals about the investment opportunity, or thinking about crowdfunding.
The thing is though, unlike VCs, those people you're talking to have absolutely no mandate or imperative to invest. This means that they’re usually looking for a reason to say ‘NO’ whenever an investment proposition comes before them.
So it's absolutely critical for you to understand where an investor might see risk in your business, and address their concerns up-front. There are at least 99 questions about your business that an investor might have in their head, and I am astounded on a daily basis how many entrepreneurs don't know the answers!
So get ahead of the pack and make sure you're well prepared. Here's a summary of the key areas that most investors will consider:
1 Vision - what your personal vision for what you want to achieve, and why?
2 Problem - how large and acute is the problem you're trying to solve?
3 Solution - how does your offering solve the problem and why is it the best way?
4 Market - is this an identifiable, large and growing market?
5 Competitive Advantage - what's your unique selling proposition and how will you maintain this?
6 Customers - who specifically are your early adopters, and which customers will then follow?
7 Business Model - how will you make money and what's the lifetime value of a customer?
8 Route To Market - how will you reach your customer, and what are the costs and timescales involved
9 Traction - what proof do you already have of product to market fit?
10 Intellectual Property - what patents, trademarks, copyrights, domains and trade secrets do you have that give you an advantage?
11 Team - does your core and extended team have the right skills, experience and drive to take this idea forward
12 Finance - what are your historic and future projections on revenue, costs, profit and cashflow?
13 Risks - what are the social, environmental, political, operational, technical and competitive risks that you might face, and how will you mitigate against them?
14 Investment Proposition - what is your planned funding journey, how much do you need to raise now and at what valuation, what will you do with the money?
For a really comprehensive list of what you need to prepare, download this free report "99 Questions To Answer Before You're Ready For Investment" available from my crowdfunding consultancy Enter The Arena. And if we can be of any support to you as you prepare to go out to fundraise, or in running a crowdfunding campaign, then do get in touch
