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What does an investor look for when evaluating a startup?

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How to find an investor in a startup? What does an investor look for when looking for a company for investment? What is worth telling an investor?

What is a startup?

A start-up or startup company (Start-up - to launch) is a type of business aimed at generating income by implementing a fundamentally new idea.

Big idea

When evaluating a company, investors examine three of its strategic characteristics.

One of the most important characteristics that investors are looking for is the presence of Big idea, which in the future can be used to build a big business.

Suitable market

Investors also study the market. It should be big and interesting. As great as the idea is, if this is a small market for certain type of food for parrots, then serious investors will not invest in it. The idea should be large-scale in order to take this market an important share in the future. Did you know that one of the most common causes of startup failures is the wrong market? (The company is developing a product for a non-existent market (insufficient demand). Before starting a startup, analyze if there is a market for your product, calculate the potential sales for the year: Total number of buyers in a year multiplied by the cost of the product.

You can find confirmation of your rating using modern analytics tools including Google Trends, Google Keyword Planner, and Facebook Advertiser Tools. Using these tools, you will be able to determine the level of the proposed solution.

When there are many buyers, the market itself pulls the product out of the startup. The market is hungry for filling and will be saturated with the first viable product offered.

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Team

The project team also plays an important role. No matter how great the idea and promising market, if there is no one to drag the project, it is unlikely to develop into something strong.

What problem does your business solve?

What problem is your business solving? How can it be useful to society? Any big problem is an opportunity. If there is no solution then there is no reason to exist. No one will pay you to solve something that is not a problem. Try to offer a product or service that solves the problem today. Thus, your startup will be in demand. People are not willing to pay for a result if it doesn't solve their problem.

Projected profit

The next point that your potential investor will pay attention to is the projected profit. Try to figure out how your business model will take your product to market, generate profits, and increase your valuation. Also, be sure to calculate how much it will cost to manufacture one unit of your product.

Have you checked all 5 points? Now you can look for an investor, as startups have become a whole industry, a huge investment sector. Interest in startup investing will only grow, as it is a concept of something “new” and “innovative”

In your opinion, what else can a potential investor look for when evaluating a startup? Share your opinion in the comments below! If you wanna learn more or know more you can contact my team or you can jump into a one-on-one call with me right now clicking one of the the below buttons.

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The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future

“Thoughtful, funny, and compulsively readable, this guide shows how ordinary people can build solid livings, with independence and purpose, on their own terms.”—Gretchen Rubin, author of the #1 New York Times bestseller The Happiness Project

Alessandro Rocco Pietrocola is an entrepreneur, fintecher, investor, blogger and author based in London and operating mainly in Europe, Asia and Oceania with main focus on UK, Baltic Countries, Russia, China, Hong Kong, Malaysia, Singapore, UAE, Middle East and New Zealand as area of interest! At the moment is the CEO of Astorts Group. He is an UK FCA (Financial Conduct Authority) and NZ FSPR (Financial Service Provider Register) Approved Person and has great experience as director of regulated companies.
He uses to dedicate part of his life to inspire others and help them achieve the most out of their lives. Since he was 20, he had successfully founded and managed several companies operating in the field of management consulting, wealth management and fintech. He is Member of Institute of Directors in London, Member of Changer Club in Riga, Member of Fintech Association of Hong Kong, Member of Singapore Fintech Association, Member of Non Executive Director Association in London and Member of Alumni Network of Draper University in San Francisco. He loves travelling, he is a cigars lover, an amateur golfer and a dapper man.
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