In order to attract the best investors for your small business, it is imperative that you learn what makes them tick. You must learn to view the world from an investor’s eyes instead of from your own. The reality is that investors are generous people, but more importantly, they are calculating businessmen. They use a myriad of methods in order to choose which ideas to invest in and which companies to work with.
According to a study done by Shai Bernstein, one of the most important things early-stage investors pay attention to is the characteristics of the company’s founders. The study revealed that this was the information most pertinent and useful for investors in evaluating if a company was worth investing in. This makes sense, because in the early stages of a business, there is not much information available to investors to evaluate a company. It is rare that a business will be immediately profitable. An investor will believe in a business with a visionary leader determined to win.
The second factor highly important to early-stage investors is the network and social influence of the company’s founder(s). A business that is highly connected and recognized on social media will have an exponentially easier time recruiting the help of investors than a business that is completely isolated from the rest of the marketplace. By already establishing your business in your immediate network, you are setting yourself miles apart from your competition who may not be as wise.
The final factor that early-stage investors pay attention to is the financial responsibility/ financial track record of the founders. Before an investor pours money into you and your venture, they will want to know how you are handling the money that you already have access to. Things like debt/income ratio, credit score and owned assets will be of high interest to investors.
If you learn what makes investors interested in working with you and your company, you will have a huge advantage in the marketplace. Your ability to sell and convince investors that you are the company they are looking for and the company who will bring them an excellent return on their investment will prove to be one of your biggest assets.