1. Growth potential and profit
Investors want to invest in businesses which turn over substantial profits and grow significantly in value. They want a regular share of said profits, and eventually, want to exit the business by selling their shares at the most profitable moment.
Business owners looking for investment must deliver not just excellent business performance, but explicit evidence of it. Business plans must showcase past performance, illustrate future profit projections, and demonstrate how growth translates into increased business value.
It is generally not enough to walk through an investor’s door with a unique idea, disruptive business model or vague promise of future success.
An investor’s job is to manage risk and reward. They do this by demanding realistic, tangible and measurable evidence that their investment is going to offer long-term, profitable returns.
In short: they want to see strength in numbers.
2. Strong management
Investors want to invest in great people, not just great businesses. Strong management is what delivers strong business performance, maximises profit, and ensures the potential value of a business is fully realised.
Management teams must show unrivalled motivation, courage, creativity and persistence. They must illustrate to investors how their ideas, capabilities and skills translate into added-value, and deliver consistently strong business performance.
Talking at a Business Link jointly-sponsored event on investment finance, Patrick Bradley from investment group Ingenious Media observed that “what investors are increasingly understanding is that size of investment you make doesn’t necessarily have a correlation to the amount you get out the other end. It’s really whether you believe the people sitting in front of you 1) have an excellent idea, 2) have the right blend of management capabilities, and 3) most importantly, have the ability to execute the idea.”
In other words: a great idea is one thing, a pile of cash is quite another - but crucially, it’s the people steering the direction of these two things that adds the most value to a business proposition.
In short: investors manage risk by putting their money in safe hands.
3. Market opportunities
Investors want to invest in genuine, significant and achievable market opportunities. They want businesses that can capitalise on their investment by seizing said market opportunities more effectively than competitors.
Businesses looking for investment must identify and assess market opportunities and clearly outline their nature, size and potential. What is the market opportunity? How fast is the market growing? Do you have a sustainable and/or unique competitive advantage over competitors? Are there additional, future monetisation opportunities in the market? What makes your company and management team more capable of seizing on the market opportunity than others?
Painting a clear picture of your business’s market opportunities puts your position into context for the investor. For example, if your addressable market is small, an investor may wonder how their investment can increase your potential. Back that scene up with evidence of future monetisation opportunities in the marketplace, and your market opportunity becomes much clearer.
Often investors don’t have intricate knowledge of markets. It’s your job know your market opportunities and make them transparently clear to investors.
In short: turn your vision into theirs.
Getting investment ready
Investors want investment ready businesses that understand the investment journey and are ready and prepared for it.
More info - Getting investment ready
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