What Makes Your Startup Appealing to Investors?

By Jonathan Lee

According to Forbes, 543,000 new businesses get started each month (Nazar, 2013). Startups are becoming increasingly popular and publicized through media platforms, but starting a business can have a lot of risks including the challenge of finding funding. Every successful startup needs capital or money to start building the business with and your business has to look as attractive as possible if you’re going to gain any startup capital. What will investors look for in a startup business?


The following list of qualities that are important to investors were compiled from a variety of sources, primarily from articles from Murray Newlands of Entrepreneur.com, Nathan Furr of Forbes, and from an interview with an “angel investor”* Brian Frizzell.


1. Financial performance:

a. Know your company’s profits, expenditures, revenue streams, and overall performance thoroughly.

b. Assure investors they will be getting a significant return (around 300-500%) on their capital within at least five years.


2. Background experience in the industry:

a. Do you have experience or demonstrated knowledge within the industry your business is in? Make sure to demonstrate a precise understanding.


3. Company uniqueness:

a. Your business has to have a measure of originality in order to stand out among the competition.


4. Effective business model:

a. Have an effective and low-risk plan for revenue, growth and stability. Investors will examine your plan and measure its sustainability in the long term, including how feasible your current expenditures are.

b. Different investors value different things in business plans, so make sure you research your investor and cater each pitch accordingly.


5. A product or service that addresses a true need:

a. Businesses thrive when they address a problem. Try to find a common need and create a unique solution to it.


6. Large market size: a. How large is the consumer market you are targeting? An investor wants to see large profits and that is dependent on the size of your target market.


Overall, the success of any startup, at its core, starts with the founder and owner. Venture capitalist Taizo Son explained, “My criteria to invest are the founders. So I won’t check any business plans, any economic projections, spreadsheets; but (instead) I focus on the founder’s mindset (and) passion” (Choudhury, 2017).


Behind all the statistics and analytics, the company’s figurehead is you. Your passion, drive, and innovative thinking should be the first thing that investors see. What Makes Your Startup Appealing to Investors?


*An angel investor is someone who invests in small startups, often during the company's earliest stage, at a much smaller scale compared to venture capitalists.

©2020 by On the Money Magazine Online

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