The Top 6 Things I Look For When Investing

The Top 6 Things I Look For When Investing

3/10/2016


As an investor, it’s always been important to me to align with companies whose purpose I believe in, and who clearly demonstrate that they have several things in order. The race for funding is competitive, and the startup landscape is continually expanding, so it’s good to get a feel for what people actually look for when they’re considering investing. In my personal experience, I like to see vision.

Organizations that are innovative, motivated, organized, and on top of their structure game are quickest to catch my eye. As I’ve been through the grind of building and growing something, getting investors, and making a smart exit, I know the process well and have gone on to support the growth of other businesses that I feel aligned with. In the interest of supporting this process for you, I’ve laid out some key things to have nailed down when approaching investors or being in conversations. Preparation is best, but being able to wow is better.

1.Team

Leadership is everything. If the leader(s) don’t have a direct focus on their team, and feel very clear about their mission, failure is a strong possibility. Recognizing that some leaders are inexperienced, under-informed, or simply jumping the gun without enough preparation, this is a pretty big one. It might be counterintuitive to think that the leadership is what you’re looking at before the business model or financials, but truly your team is everything when it comes to the growth and sustainability of your business. Do you have what it takes to handle the ups and downs?Are you tenacious, resilient, relentless, and driven? Most importantly, are you unquestionably loyal to the company? You should also have the willingness to let go and say no to people who are clearly not aligned or working to their full potential.

The experience and focus of your team can make or break you.

2. Purpose

Do you have a mission statement? Is your entire team aware of it and familiar with language? Does everyone more or less feel aligned with where you’re going? If you can show that a) you’re passionate and b) why then you’re golden. If you don’t have the fire inside you willing you to grind forward, that can be enough to lose interest from investors. You must feel absolutely engaged with what you’re doing, because that’s going to keep you motivated when you’re challenged, and keep you connected for the long(er) run.

Gold star if you have a social impact, or can clearly demonstrate changes that your innovation will affect.

3. Differentiator

This is a big one. Who is your competition? What are you up against? How is what you’re doing unique? What need are you fulfilling? What niche market (or not) are you appealing to? If you can showcase that you’re filling an important void, and doing something new and exciting, those are two parts of the recipe for success. Bonus points if you can show that your unique vision is already working, and you need investment for growth rather than liftoff.

If your model is proven, unique, and has clear and differentiating key aspects, you’ve won my attention.

4. Roadmap

Where are you going and why? What is your plan for getting there? How do you want to expand and scale? You should have a clear timeline of your goals, they should appear achievable and manageable, and reflect an obvious thought trajectory and milestones to reflect your progress. Realistic and concise is key, pare it down, but keep it stacked with potential. Investors don’t have tons of time to devote to going through hundred page reports of what you want to do, blow them away with clear and direct representations of exactly what you plan to do.

5. Cashflow

We all know that it takes time to be cashflow positive, and that profits take time, sometimes more than we plan on, but sometimes less. It’s not necessarily the present situation that matters, but more your projections for where you’re taking your present situation. If you can clearly demonstrate that, as above, you have a plan in place and measurable means to understand you’re on track to getting there, that’s important. You should definitely have your first sales in place, so that you’ve got some experience under your belt and have worked through the early stage snafus, but you should also have realistic and grounded goals for big growth.

6. Financials

It should go without saying that financials need to be up to date, organized, and representative of where the company is going. I’m a big fan of strict budgets and keeping startups lean, especially in the early stages. You can recognize when founders have chosen to offer themselves lower salaries, if one at all, that they are truly all in with their vision and serious about making it happen. It’s that kind of dedication that goes places.

Knowing how proceeds will be used and divided is also important, investors want to know that you’re keeping it real, and that you’re focused on growth not just gratification.

Lastly, have some sort of wow factor. If you can clearly show that there is going to be a huge ROI for the investor, you’re golden. Have realistic near term goals, but aim high for your future trajectory, and keep the excitement alive with your own dedication to flexibility, creativity, and determination. This is the icing on the cake.

As you can see, it’s not all about the structures you have in place. It’s how you’re leading your team. It’s the level of passion you have. It’s knowing your mission, being clear about it, and intending to have an impact. It’s having realistic and grounded goals, but also clear aspiration and drive to excel beyond those milestones. In short, if you’re moved by your mission, have attained some traction, and have structures and team members in place, you’ve nearly won the battle.


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