They value the idea very cautiously, if it is capable of executing the project it proposes, the market... But, beyond all that, it is key that the entrepreneur establishes a relationship of trust with the investor.
What does an investor look for to invest in a startup? It is one of the key moments in the career of anyone who has dared to set up their own startup: sitting in front of an investor or business angel to tell them their idea and try to get financing. Undoubtedly, this meeting represents an important turning point for the trajectory of the project and, precisely for this reason, it is essential that the entrepreneur knows which are the factors to which the investor who could give a financial boost to his startup will pay the most attention.
Because the idea is not everything…
As it could not be otherwise, the idea that the entrepreneur presents is one of the points to which every investor pays the most attention and on which he requires the most information, hence there is no detail that can be overlooked. And although a priori it may seem easy to evaluate whether a proposal has a chance of succeeding or not, the truth is that this aspect also has an extremely important detail. Beyond whether the idea in front of them has a chance of going far or not, what the investor has to assess is whether the person who is presenting it to them will be able to carry it out correctly.
In this sense, it does not matter whether or not the entrepreneur has had previous experience at the helm of other startups, each new project is different and the investor has to be sure at all times that the person leading the project knows how to do things in the right way. It is not only that the idea will prosper, but that the entrepreneur who is telling it with so much enthusiasm will be able to make those successes that are assumed a reality. If an investor isn’t entirely sure, it will be a difficult bastion for the founder to overcome.
The team and its leader
Regarding the founders, it is important to know that there is a theory among investors that states that the ideal is to have a team made up of three different profiles, which allow there to be a balance in the staff between business, marketing and, of course, technology. However, this maxim is not always fulfilled, and it does not have to be a handicap when it comes to convincing an investor. There are many examples of startups that have come very far and that their founding team did not have this maxim.
For this reason, regardless of whether or not this rule is respected, what the investor or business angel has to perceive at all times is that the team that is going to undertake the project has the experience and training necessary to ensure that the startup achieves the objectives that are set. In this sense, another detail that every entrepreneur has to pay attention to is to make it clear to the investor that there is an outstanding leader in the team.
Beyond the role they play, whether they are responsible for technology, marketing or business, what must prevail is an overwhelming personality and, with it, the ability to be able to infect the rest of the team members and future employees, always having a clear vision of the project. This, without a doubt, will be a key factor for the investor to perceive that not only is the idea successful, but that the people who are going to implement it will bring it to fruition.
Metrics and the market to conquer
Of course, depending on the phase in which the project is, when looking for financing, entrepreneurs will have to present their potential investors with certain metrics that support the viability of the project with numbers. In addition to this, the investor must know the market in which the startup operates, so that entrepreneurs have to know at all times which investor or business angel they should go to depending on the sector in which they want to land. It is not advisable to send presentations left and right without knowing who you are addressing. For this reason, the entrepreneur not only has to know the market but also the investment environment to get the idea right, especially when the project is in very early stages.
The ‘feeling’, the entrepreneur-investor relationship
And throughout this process, it is vitally important that the founders of the startup do not try to lie either when presenting the data that supports that their project is viable, or when explaining the idea, or when arguing their previous experience, since that can play a trick on them in the not too distant future. Because regardless of the proposals they present to the investor, the financing they bring to obtain, the metrics, the key is to be honest with that person who can financially promote the project.
For an investor to opt for one project or another, one of the factors that will be most taken into account will be the feeling, the approach and the good harmony with the founding team of the startup. For this reason, entrepreneurs must earn their trust, not only by being honest with the data but also by making the investor feel like another member of the team and letting them know the decisions that are made. This is a key point that many entrepreneurs neglect and that can end up deciding whether the investment goes ahead or not.
