Angels, private equity firms, venture capitalists and mutual funds all evaluate investments based on some criteria.
From brilliant-insight baby to billion-dollar behemoth, investors will evaluate every stage of a company’s growth differently.
Focus on these four topics when you pitch your company for funding:
Sustainably different strategy
Demonstrate what’s special and unique about your company and how you’ll sustain that strong position.
How fresh, different and unique is your customer solution? Are your algorithms good enough to offer super swift service or are your costs structurally low?
You need to be able to demonstrate you have something different from the pack, and also be able to prove that it is your customers’ pain points.
It is advisable you think of complex logistics or high-volume selling businesses. Be sure you have a track record that backs up your pitch if execution is your pitch for why you’re different.
Right team for this endeavor
For early-stage companies, the investor considers how strong and efficient the team is. It is the most important aspect for at the beginning stage as your market and product may not exist yet.
So the investor evaluates what unique combination of skills and experiences your team possesses. What makes your leaders the potential winners?
As your business starts to scale, your execution will demonstrate why you’re a good fit for the job.
Business model
A valuable business is ultimately rated by Money — profits and cash flow. Your company may become strategically valuable on your way to profitability, and you might be acquired early when public investors sense you will soon become profitable.
You have to show how your business model will be profitable. You need to look at and understand the margin structure of similar companies and show how you will compare to them when placed side by side.
Investors focus on the financials of later-stage companies. Your financials might be screened almost exclusively by public investors, looking for profit growth and expanding margins.
This is different for younger companies as the target model and cash needed to break even are the foremost concerns.
Market size
Investors want to be sure your company has enough room for growth. There’s a popular lesson that reads — “You can’t make a big company in a small market.” It is important to focus on the total addressable market rather than trying to create one. Markets are sized as “bottoms up” and “tops down.” Give both methods a shot to know if assumptions are reasonable.
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