hand-427504_1280As an entrepreneur, you’ve watched Shark Tank and done your fair share of googling, but when it comes down to it, do you really know what investors look for in a startup? Before you meet with any potential investors, be aware of these few things they’ll always be on the lookout for: 

Market size.

Investors want to know about the industry the startup exists within. What is the competitive landscape? What is the size of the market today? Investors are unlikely to bank on a product or service that is targeting an incredibly niche market, where profits have a smaller cap. For example, if you were an investor, would you rather bet on a company targeting only men in the Midwest over the age of 45 with two small children, or a company targeting all men in America? Of course there is a higher profit potential with the latter, and investors will immediately spot this when presented with startups.

Terrific team.

Startups are defined by the people, so for investors, it’s imperative for startups to have a strong, capable team behind the wheel. Investors are interested in the backgrounds of the founders, so be sure to cover this in your pitch. What is your professional background? What unique skills do you have that will benefit your journey in the entrepreneurial world? What led you to developing this business? Investors are interested in hearing the founders’ story to get a better understanding of who they are and what they’re capable of doing. Investors want to know what past successes and failures you’ve had with businesses, and how they came to be. Remember, investing into a startup is sometimes more about having faith in the people than in the business, so give investors what they’re looking for to secure capital for your company.

Customer reaction.

Because you’re a startup company, chances are investors are not counting on you having millions in sales. However, they are going to be looking for proof that customers are responding positively to your business. What feedback has your startup been given? Have there been any inquiries about how to buy your product? No matter how strongly you feel about the value of your company, nothing matters if customers don’t feel the same way, so this information is incredibly important for investors.

Dollar signs.

So maybe the investor you’re pitching loves you, your product and your long-term business plan, but is still hesitating about making an investment. What’s the hold-up? Be sure you go into detail with potential investors about how they will get their money back. Even if someone loves your startup and believes in your vision, they need to know their money is not going to waste. Have a concrete plan in place, and lay it out clearly for investors.

Realistic expectations.

On paper, sure it sounds great to say that your startup has no competition, no debt, and is projecting to do millions in revenue within a few years, but is it true? Investors are not looking for the sugarcoated version of your business. Be realistic when it comes to how you’ll move forward with your business plan and what sales you hope to achieve in the next few years. You’re not doing yourself any favors by starting a relationship with an investor off on a lie. Plus, any experienced investor will be able to tell when you’re exaggerating the truth, so don’t embarrass yourself during this critical pitch.

Investors know that a successful startup must be run by a strong leader. Do you have what it takes? Take this free assessment.