In the world of business, everyone is looking to increase profits, and the same goes for investors who will contribute only where they think an opportunity for growth exists. While it is not a prerequisite for start-ups to operate on a global level to attract investors, they should be concise and able to direct investors toward the market they want to enter. This direction is measured in terms of a new company’s strategy, goals, and milestones it has developed to foster profits and growth.
So, what are the most important points that play a key role in attracting investors? Below are the points you should focus on to attract global investors if you are an entrepreneur or are planning to launch a start-up.
Your business model should be comprehensive in its approach. You need to be clear about the economics of your start-up. If your model makes sense, investors will indeed be attracted to provide funds for your idea. Similarly, it is beneficial for your model to be valid in various markets around the globe; however, it needs to prove itself in the local market first. Another point that you need to include in your model clearly is how you will carve out a market share for your business, especially in the presence of competitors. Do not make your initial results your long-term estimates. Sometimes, consumers test new products in the market simply because they find them interesting and not because that product fulfills their needs. As a result, continually improving your strategy with changing market demands can also benefit your company’s success and attract investments.
You need to adapt to the continuously changing demands of the market. Some of your strategies may become redundant, making your business less efficient. These tactics must be changed to better suit the progress towards your start-up goals. Innovations, such as those in technology, make some aspects more efficient, and the impact of these aspects on growth should be analyzed comprehensively and adopted if the prospects seem beneficial. Investors are always attracted to a company that adapts to keep up with the changing market.
Any kind of company or business, regardless of their model targeting the same market segment as your company, should be considered a competitor. Consequently, your start-up needs to clearly identify its competitors and their competitive edge while simultaneously determining your advantages over them. Incorporating your advantages competitors and defining how you are going to grow over them into your strategy is what investors look for before making decisions about becoming a stakeholder in a company.
Compliance is an important aspect when dealing with global investors, even though local investors might not consider it a priority. Any start-up should ensure that it complies with all rules, regulations, laws. Taxes and company structure, along with compliance factors related to banking, Foreign Direct Investment (FDI), employment, and benefits, must comply with government rules and regulations. Global investors do not want to be associated as stakeholders to a business that is not meeting the regulatory rules and requirements because it will put them at risk of potential legal action for non-compliance.
Structure and Valuation
Familiarity with the structures of debt and equity is essential. Common stock has different requirements relative to convertible debentures and convertible bonds. Valuation methods can be different for different kinds of structures. The valuation procedure depends on your business and which best suits your business. Your idea of dilution and the amount you are trying to raise should be well defined, and your plan should also be comprehensive regarding your break-even position.
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