What Investors Want to Know About Your Business
When traditional loans are not an option or entrepreneurs have personal reasons for wanting to avoid them, many people with dreams of launching their own success stories turn to private investors. There are two primary types—angel investors and venture capitalists—and each of these will have various types of questions to ask of the people seeking their help in business.
Angel investors are typically found among a new business owner’s friends, family, and colleagues. Personal interaction with the entrepreneur will go a long way toward influencing whether or not any of these people can imagine themselves investing in the loan seeker’s dreams. Past dealings, personal histories, and other issues of integrity carry a great deal of weight with angel investors. In times like this, a winning personality can definitely be an asset.
Venture capitalists may be otherwise strangers to the person seeking the loan. However they come into contact with the businessperson, they will entertain the notion of investing in the services and/or product if excellent evidence of future success can be provided.
Anyone hoping to gain the attention of angel investors and venture capitalists should approach them with the same respect as they would give professional bankers and other traditional lenders. Furthermore, each entrepreneur should understand that investors are much different from loan providers as they actually own a portion of the company. Acquiring this sort of financial assistance translates into giving a portion of the company pie away. In the long run, that might be exactly what you needed to succeed, but it should be considered carefully none the less.
Bring everything you might normally take to a bank with you to the very first conversation. Floating an idea is one way to approach, but in the end it may seem amateurish and some ideas are stolen this way. Among the documentation you should provide is your business plan with market, competition, and strategy analysis included. Be prepared with personal financial statements, pertinent business financial statements, resumes, and bios as well. Everything you can share that will help your potential investors understand how well-prepared, educated, and serious you are will help them to build confidence in your dream. Furthermore, with so much information to digest, investors are more likely to understand the nature of your goals and to feel investing in your business to be a financially sound move.
Whatever your needs, remember what a large request you make of these individuals. Their involvement should never be taken lightly. Just as you would like them to select you as a worthy investment, you should also be very selective in the individuals you bring into your fold.