The current market is full of private equity investors who are looking to invest in unique ideas or in the niche segment space. Clearly there must be a considerable amount of surplus floating in the market. So basically what one essentially needs to be able to do is master the art of determining the right market and the right investor, and Bingo! You are all set for takeoff! I have talked about some tried and tested ways to do that below which you can use to capture those untapped funds.
If you are not just another me-too entity and have a unique idea to offer, be sure the investors are going to spot you. Other features such as proprietary features, visible competitive edge over other players, exclusive licenses, etc act as incentives for investors to choose you over others.
The tip is to offer a macro view for your product. Start in a top down approach from your general product features and drill down to the basics and ultimately showcase how your product is going to make a change in the industry, what elements it constitutes that would set you apart from your competitors and help provide solutions that other cannot. Make sure you give investors all the possible know how’s and answer all the product questions.
Your Performance: Finance
You need to back your plans with sound financial metrics. Investors feel safer with people who are good at numeric data amidst so many business ideas to choose from. Showcase your ability to tap into max market surplus by projecting thoughtful future cost analysis and cash flow projections always helps.
Your Performance: Industry
Be well versed with the industry stats of the one you are dealing in. Investors are not interested in trying out with new and inexperienced entrepreneurs. You need to project your industry knowledge and expertise so that investors can expect a great leadership and high performance track record in the future. More the industry expertise, more the investor confidence.
Your Marketing Strategy
Share your pre-proven go-to-market strategy with your investors and impress them with your overall as well as phase-wise development plans, product / service launching and promotion schemes, etc. Investors need to believe that you have what it takes to capture the desired market share within the stipulated time frame.
Every investor has a different set of requirements, different notions of business and hence expectations from the ideas he puts his money into. Your pitch and business plan needs to match with the needs of the investor. Moreover, leave no stone unturned to showcase how your business model has the potential to generate profits.
Size of the Market
In your efforts to make it easy for your investor to believe in your capacity to generate positive cash flow, market size plays an important role. While venture capitalists go for strong bullish markets with limited competition, seed capital investors are more interested in large market segments. With the current popularity of the big data, large markets have become directly proportional to the question of business endurance and sustainability.
For investors, the aspect of scalability is crucial. That is, keeping the market size factor constant, the incremental cost of revenue should have a decreasing trend over time. Once the business is in the scene, it should not need excessive resources to grow and flourish. Classic examples would be Google or Microsoft where cost of distribution, replication or new feature additions are negligible.
Lastly, but most importantly – The Human Capital. If you are surprised to hear this, don’t be. Business is never a one-man show and investors are more likely to be interested in not just you but your entire team since they would be collectively responsible for the achieving of business objectives.