You have a business idea, but do you need resources to carry it forward?
What are the investors setting before investing in a project?
- Business team : the experience, knowledge and motivation of the team leading the project will be valued.
- Business idea : not only refers to an innovative idea, but an idea that has a target market and ability to generate income. An idea can be very good, but if there are no buyers, it is not viable.
- Return on investment : that is, how long they will recover their money. For this you must have carried out a financial study, taking into account your cash flow, sources of income and costs associated with the project.
When to ask for money from private investors?
There are different moments of the life cycle of the company, in which you can look for investors
- Birth : at this time, the company is only an idea embodied in a sheet, and although there are economic projections and market studies, the company still has no value in itself.
- Growth : the company is already in operation, even if it has little revenue flow, but it already has a client portfolio, an operational process and know how.
Surely all start up, thinks that the first thing you need to start your venture is “a private investor”, but this thought can be wrong.
Your company will have a better chance of getting an investor, if the team can demonstrate that this idea can produce income. For this you must be able to establish what is your “minimum viable product”, to be able to show it to your investor.
The concept of “minimum viable product” arises from the agile methodologies implemented in the automotive industry, and refers to the product obtained and tested in empirical tests with your customers.
For this it is a good idea to try different prototypes with your clients, and only to advance with the one that you check with facts that satisfies your client.
Another issue to keep in mind is that this investor will become an investment partner, for which, he will be partly owner of your company. If it has little value, and the value of the investment is greater, you can become an employee of your investor.
If your enterprise already has customers and a proven business model, not only will it be easier to get investors, but your negotiation skills will be different.
In another post we will see how to sell your business idea through an Elevetor Pitch.