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5 Reasons Why Investors Ignore You

Looking for investors? Having a business idea doesn't guarantee support from venture capitalists. These are the 5 top reasons people like you get ignored. Read on to get yourself noticed.

4 mins readAugust 01, 2018

Looking for investors to fund your new business? Start here.

So you have come up with one of the greatest ideas ever imagined – an exceptional idea that could literally change your life. You try to get it off the ground and take it one step further by looking for startup investors to support the business, but you don’t have any luck getting buy-in or funding from investors.

Having an exceptionally sounding and totally unique business idea doesn’t always guarantee support from venture capitalists. You need to prove the real worth and true potential of your business to earn their investment dollars.

1. Make your business plan bulletproof

It might be a simple document, but your business plan represents the heart and soul of your project. It is an essential item that could turn your dreams into reality, but it could also turn hopeful ambitions into wasted opportunities.

Your business plan should always be investor-ready, and you must be able to answer all their concerns without batting an eye.

Bear in mind that investors only take an interest in your idea if there are guaranteed long-term returns that are worth more than their original investments.

Your business plan should have a detailed view of your goals and objectives, and it should have a clear mission and concrete strategies on how to reach those goals.

  • Investors are not just interested in your good ideas but also how competent and committed you are in managing those ideas.
  • Get your facts ready. You should have accurate information about the market, customers, and current competition.
  • Your marketing plan should clearly explain the pricing, promotion, and distribution tactics.
  • Outline your barriers to entry and prove their effectiveness in keeping competitors at bay.

2. Can your business grow, and grow, and grow?

Looking for investors is not an easy task. Aside from the fact that you need to convince them of the potentials of your small business, you should prove that there’s enough room for growth.

Investors are already well versed in treasury bills and other ways to make safe profits. What they want is a growing and sustainable investment with much bigger returns.

One way to convince investors is to show them customer longevity and market stability. You need to demonstrate that your business has lots of potentials, in terms of streams of revenue and new market shares. Don’t settle on flowery words and persuading explanations. Instead, present them with carefully analyzed growth statistics to prove your worth.

  • Assess the strengths, weaknesses, opportunities, threats, and readiness of your business.
  • Exercise due diligence by looking at your turnover, profits, and sales to measure growth.
  • Establish ways to win bigger market shares and provide substantial action plans.
  • Evaluate the possibility of partnerships, joint ventures, and acquisitions to maintain growth.
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3. The “Me Too” Business Model

Investors are very keen when it comes to the amount of money they are going to entrust to your business.

Startup investors want to know what makes you different and how you’d be able to produce a growing revenue with increasing profits, especially if there are business models like yours currently competing in the market.

Think of something that would make your business not just unique, but exceptionally distinctive to land venture capital.

Take CarMax for example. The company turned a common idea into a one-of-a-kind profit-yielding business. By building gorgeous showrooms, offering no-haggle pricing, and displaying well-maintained old cars, they manage to offer something new and fresh to the consumers.

  • Appeal to the younger crowd by increasing your online presence and developing mobile apps.
  • Think of a different in-store strategy, something that will catch the attention of everyone.
  • Create strong competitive advantages to keep your business stand out from the rest.
  • Develop something that is fundamentally different to improve and offer a unique experience.

4. How’s your team spirit?

Angel investors, venture capital firms and private equity companies don’t just invest in your ideas, they’re also investing in the whole team.

From your partners and the people behind research to those working in the office, everyone in the team plays a big role in getting that “yes.”

Experience, personality, and team spirit are vital for many investors; after all, the ideas and programs will be executed by these people.

What matters to them is the ability of each and every person to work as a winning team. To gain investment opportunities, your team should:

  • Be cohesive, professional and confident. Everyone must cooperate and be willing to collaborate.
  • Build a core management team with a minimum of 3 and maximum of 5 members.
  • Provide a detailed organizational structure for all of your team members with respective roles.
  • The whole should be greater than the sum of its parts; people should complement each other’s talents.
  • Actively follow investment websites and learn about research and stock analysis.
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5. Leadership starts at the top

The last thing that businesses often fail to demonstrate when looking for investors is leadership. Even if you have a great plan, an unsaturated market, a bulletproof proposal, and a winning team, all of these would be worthless without great leadership.

You won’t raise capital for your business if you don’t have a respected and convincing leader.

Financiers are often mesmerized by a confident leader who wholeheartedly believes in their business venture – someone that has a winning pitch to impress everyone in the room the moment they speak up.

Likewise, they should be able to handle their team in an effective and organized manner. Keep in mind that investors would never invest in startups lacking great and powerful leadership. Hence, as a leader you should:

  • Be convinced that your business is worth all the money and investment.
  • Be a respected and confident person, but willing to take their input and accept constructive advice from them.
  • Take your time to study everything, and don’t present if you’re not 101% ready.
  • You don’t need to be a smooth presenter, but make sure you know what you’re talking about. Practice your pitch over and over again until you have it completely nailed.

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