10 Characteristics That Attract Investors to Invest in Your Startups

Preeti Karna Preeti Karna
Jun 13, 2022 5 min read
10 Characteristics That Attract Investors to Invest in Your Startups
The article is contributed by Mr. Saarthak Bakshi, Chief Executive Officer (CEO) of the International Fertility Centre.
Mr. Saarthak Bakshi is recognized as Forbes 30 under 30 ASIA, 2017 for HealthCare and Science. He is known for his persona as an engineer, an entrepreneur and a social worker. He flourished his career by working with reputed companies – Infosys and Ernst & Young – as a Software Engineer and IT Risk and Assurance Analyst respectively. He soon realized that he has an inborn passion for entrepreneurship and went on to launch a slew of ventures including IFC.

As we know that starting a business can be expensive. We may have few cash on hand to get started without some outside help but sometimes, it is important and beneficial to have investors in your business. It gives you sort of security. Investors in your business are different from lenders. Instead of monthly repayment like lenders, investors give you money in exchange for ownership of part of your business. Apart from money they can also be an important source of business-related advices and strong business networks, which you can utilize for your own business. Therefore, it is important to draw the attention of the investors to make their decision firm to invest in your business. Most important thing is that investors want to see a return on their investment. They make money by putting their money into the growing business. Therefore, how to woo them plays a crucial role in the success of any startup. It is not necessary that every investor looks for the same things but still there are chances of commonality.

So, here are ten points to make the investors interested in your startup.

  1. A passionate business proposal
  2. A market-oriented deal
  3. Demonstrate your success rate
  4. Competitive advantages
  5. Have an emotional approach with logic
  6. A strong team
  7. Experience
  8. The investment structures
  9. A scalable model
  10. Future vision and planning

A passionate business proposal

Having a passion for their startup is easy to be found in new business founders. Β But how your business will help the investors to gain profit is a deciding factor for their interest. They want your confidence justifying that it is an improvement over existing products or is a new way to address an old problem. You should demonstrate your firm belief and confidence in your business.

A market-oriented deal

It is one of the important points that to pitch potential investors, familiarity with the market is generally the safest option. Startup investors look for opportunities in sectors that fit their interest and expertise. They already have an idea of how businesses become profitable in this industry and what it will take for your business to yield a return on their investment. Thereafter reviewing and organizing your proposal, go for the market research to pitch in a suitable investor.

Demonstrate your success rate

A track record of previous success is critical to attract the interest of investors who can take your venture into your business. Most of the times successful startups are a rarity, therefore it becomes difficult for inexperienced entrepreneurs to convince the investors to lend their capital. But, if your business can captivate the market and the customers and if your track records give guarantee of success, then you have a fair chance.

Competitive advantages

Most of the time the investors look for satisfactory answers for the following question: What makes your product/service unique? There must be something about your product that sets it apart. If your product and you’re the first to the market, then it’s a best thing. However, most startups are entering existing marketplaces. What then makes you different? And how affordable it is in comparison to the already existing quality?

Have an emotional approach with logic

Whenever you are pitching with your investor, you must hit them on both emotional and business front. Include a story with your plan. Make it appeal to real-life scenarios and how your idea will solve the problem. At the end of the day, investors look for founders who have passion, motive, and experience to create a profitable as well as sustainable business. Its not a matter of only ideas or concepts, the investors look for to invest in you and your team and their ability to successfully execute your business plan.

A strong team

If you have a competent team, you have the attention of the investors. Show them that your team is intelligent, strategic, successful and follows strong financial discipline. Show them the qualifications of each member and what they bring to the business. Having a team that is knowledgeable, willing to learn and can handle multi-responsibilities are all positive traits that will impress your investors.

Experience

Experience can play a convincing role in winning over investors. If your team members have prior experience in their respective fields or have been involved with a startup in the past, it shows that you and your team have knowledge in your market and are tenacious enough to complete goals.

The investment structures

You should have a clear business structure in place that allows the investors to consider it and buy it. You should also plan for how the investment will work. In that plan you must include, a clear valuation for your business and a stockholder’s agreement that clearly sets out the rights of all the owners.


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A scalable model

Build your business with scalability in minda. Most of the investors expect the return of what they are investing. Therefore, scalability is a major factor for successful startups, and a great attraction to the investors. Basically, scaling is known as adding revenue at a rapid rate while adding resources incrementally. The amount of resources required doesn’t change as your customer base increases, driving consistent growth and improving profit margins. Therefore, the plan of your faster revenue, make the investor to consider your startup dearly.

Future vision and planning

Give your investors a picture for your potential startup, that is where your company will be in the future and make them optimistic that you have credibility to achieve your goals. Plan in the lines of: where is your startup going? How do see your startup in the coming years? Do you plan for the worldwide market? Etc.

Conclusion

Attracting startup investors to your company is necessary for your business. Therefore, you must put all the pieces in place to show that partnering with your business would be a smart move for them. Highlight the best parts of your startup and discuss your challenges with them openly. Investors will get on board when you demonstrate your best.

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