You spend weeks coming up with an extensive business plan and great proposal backed up with extensive research and market analysis but at the end of all the toil, you still just can’t get an investor to provide startup capital for your business. You even may have already started the business and may just want to kick things up a notch but still cannot land an investor willing to bet on your business. There are a lot of factors that cause this issue, and we’ll be going through them in this article so that you do not make the same mistake.
Investors sure would love to put their money into something that would give them a good return on their investment. Think about this and then ask yourself if your business would be as profitable. If you’re confident that it’ll be, to the delight of investors, then let’s go right on. Your confidence in your business or idea is very important as that’s what investors want to see.
1. You met the wrong investor
Every business person/investor has a niche or a few niches that they really command a huge level of respect. Niches that are in their area of expertise. Don’t make the mistake of approaching any, and every investor you can lay your hands on their contact information. Make your researches and reach out to those who have already succeeded in making a name for themselves in your niche. Don’t be surprised, they’ll be more empathetic knowing that they’ve once been like you and then point out what you’re doing wrong. Then you have learned something valuable rather than cold-calling every angel investor you know.
2. Trust
Trust doesn’t just happen, as you would have to work to earn it. But once earned, can really be fragile that you should be careful of your steps and decisions that you don’t lose it. Investors want to have that firm belief in the ability of your business to succeed. Earn this trust and you’ve won your investor. One way you gain this trust is by effectively communicating your business’ vision, goals and values. Be transparent enough and don’t hide relevant detail from them or they start to think that you have some things up your sleeves.
3. Market size
A huge market size signifies a greater likelihood of higher returns on investment (R.O.I). Investors want to know that this product or service that your business is about has a lot of people it could meet their needs. Of course, a huge market also means more work to be done in terms of gaining a substantial market share in that market, but the truth is that investors want to hit it and also hit it big on any of their investments. That’s why you have a lot of work to do as a business person.
4. Your Team
Investors would want to know who they are trusting with their money, that’s why your team has to be on point. You really do not need the best, but the right people. It’s not about the big names, investors want to see that based on your business model, those who are running the day-to-day activities are well capable of getting intended results. Can your team deliver? That’s the most important question. If there are doubts about your team, then you have some restructuring to do.
5. No evidence of likely success
We don’t need anyone to tell us that people, in general, are definitely going to be less likely to invest in any business if they don’t see any possibility of that business’ success. This one is very deadly as investors would want to put money into something that would work.
Investors are humans also. Don’t forget that. We often confuse them to be mindless individuals that are desperate to throw money or gamble on any and every opportunity, but that simply isn’t so. Put yourself in the shoes of an investor and try to get something that would be beneficial for them because people don’t invest with the hopes of never seeing their money again.