What investors are looking for before they invest in a start-up

Any start-up founder must know how to attract investors and why they would invest into it if they want to be funded. Here’s a summary of what I’ve learned working with investors over the years.

1. It’s about the founder as much as it is about the start-up

Just having a business idea that will work on paper, proven with a good business plan is not all! The founder needs to show her/his dedication, prove that he/she is in it for the long run and be knowledgeable about what the start-up is about. Whilst investors appreciate passionate entrepreneurs, they are also looking for someone willing to invest their own money. You, as a start-up founder, must be willing to demonstrate you believe in in what you do – enough to invest your own money.

2. Traction

A proven track record or at least interest of the market are a must. And not just with predictions but having tested your product and service and prove that there is a market for it.

3. Growth potential

Most investors want to see that you have growth potential and won’t get stuck on a lower level. In addition to that you need to demonstrate how you can outrun your competition and be flexible when the market situation change.

4. Your USP

Your Unique selling point – or how I call it Unicorn Special Power. This is to be crucial for an investor. What makes you unique? This is often also the most difficult question to answer. What is it that sets you apart from your competitors?

5. Knowledge within the start-up team

Do you have all competencies needed in your team? And if not, how will you resolve this?

You need to ensure you have team members covering the key elements of running a business and the areas that your business covers. No person has all the skills needed to run a business – this is when you have to ensure the entire team has.

6. When will they make their money back?

An investor wants to know how much they need to invest, when they need to invest and how much they have to invest. And the other important question to answer: When will they make their money back and when will they make some profit? After all, they do want a return on investment (ROI).