In the world of business, everyone is looking for profits and the same goes for investors who will invest only where they think an opportunity for growth exists. It isn’t a prerequisite for start-ups to be working on a global level to attract these types of investors. They should just be concise and well directed to what market a particular start-up wants to tap into. This is measured in terms of a new company’s strategy, goals, and milestones it has set for growth.
So, what are the most important points that play a key role in attracting investors? Following are the points you should focus on if you are an entrepreneur or 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 surely be attracted to provide funds for your idea. It is great for your model to be valid in various markets around the globe, however, it is a must for it to prove itself in the local market first. Another point that you need to clearly include in your model 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, people try new products on the market just because they find it somewhat interesting and not because that product is a part of their needs. Continually improving your strategy with changing market demands can also prove to be very beneficial for your company’s success and to 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. Such 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 on growth should be analyzed comprehensively and adopted if the prospects seem beneficial. Investors are always attracted to a company that changes itself to keep up with the market.
Your start-up needs to clearly identify its competitors and, while doing this, there is one thing that you should know: Any kind of company or business (regardless of their model) that is targeting the same market segment as your company should be thought of as a competitor. Incorporating the advantages you have over these 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 a very important aspect when dealing with global investors even though the local ones might not be finicky about it. Any start-up should ensure that it complies with all rules and laws. Things like taxes and company structure along with other compliances such as those relating to banking, FDI, employment and benefits must be in compliance. Global investors do not want to be associated as stakeholders to a business that is not meeting the regulatory rules and requirements.
Structure and Valuation
Familiarity with the structures of debt and equity is essential. A common stock has different requirements relative to convertible debentures and convertible bonds. Valuation methods can be different for different kinds of structures. It depends on your business strategy as to which valuation procedure suits you the most. Your idea of dilution and the amount you’re trying to raise should be well defined. Your plan should also be comprehensive regarding your break-even position.
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