What are different investors looking for?
No matter what type of investor you are looking for, you will have to prepare a compelling case to get another individual or company to put money into your business. Different investors, however, look for different things when making their investment decisions. Who you are approaching for investment will dictate which points or areas you should highlight about your business.
If you are just getting your business off the ground, angel investors can be a great source of capital to make your vision a reality. These wealthy individuals use their own money to invest in businesses they believe in.
What are angel investors looking for?
Since your business is brand new, angel investors aren’t going to be looking for sales or track record of the business. Instead, they will look to see if the business has the foundation to become successful.
Specifically, angel investors will want to see that you have a strong founding team and a compelling business plan with an identified market. They will be backing you, as the entrepreneur, so you must provide them with the confidence that you have the ambition and resources to execute on your plan.
As with angel investors, venture capitalists invest during the early stages of a business. These investors invest through a fund on behalf of a larger group of investors. Often, venture capitalists will invest seed money in pre-profitable companies.
What are venture capitalists looking for?
Again, because they are investing in businesses that are not yet profitable, venture capitalists will be looking closely to see that the business has a strong foundation.
In particular, they will want to see that your company has a strong team with a proven track record of success. They will focus on the market opportunities for your business and its potential for growth. They will want to see that you have a product that has the potential to do well in the market, grow significantly, and that stands to make a good profit for their investors.
If your business is already established and requires capital to expand or grow, then you may consider seeking investment through growth equity investors. A minority growth equity partner will allow you to retain control over your business while providing the capital and expertise to help you execute on your vision.
What are growth equity investors looking for?
Because growth equity investors are investing in more mature businesses (mid- to high-level growth of 20% or more), they will have more requirements as they decide whether to invest in your company.
These investors want to see that you have a strong and multi-disciplinary team. You should also be able to demonstrate that you have a proven business model and that you are on a clear path to profitability. In addition, growth equity investors will want to understand your use of the proceeds and how they will be leveraged to support the business’s growth. Do you have a clear acquisition plan ready to put into gear? Do you plan to invest in building out your team or speeding up product development, or focusing on sales and marketing to retain new customers? This clear vision will attract investors to support the business on its growth trajectory.
Contact CBGF today
CBGF is an investment firm that specializes in minority growth equity. If you have an established business generating $5 million in revenue that requires capital to expand, we want to hear from you. Contact us today to learn more.