It is difficult to launch a successful startup. Not only do you need a brilliant idea that appeals to your prospective market, but your company also needs venture capital to grow and thrive in the competitive business world. This way to obtain the capital you need is to attract investors who are interested in funding your startup for a share of equity.
Until recently, only wealthy people had the opportunity to make risky business investments in startups. With the appearance of the Title III of JOBS Act, anyone can choose to invest in a startup. These new businesses are risky ventures because few startups succeed long term. Partnering with the right investors makes a big difference in how quickly your company grows, so it is essential to make your business attractive to potential investors. Implement these four practices to show potential investors that your company is worth the risk.
Know Your Market
Having a brilliant idea as the foundation of your startup will not lead to long-term success if there is no market for your product or service. Your idea should enhance convenience or solve a problem for people, but you also need to carefully define what your niche is so you can target the right type of customer. If you can show potential investors that you have done the necessary work and identified an ongoing market, they are more likely to see the value of your company.
For example, look at the companies Silicon Valley’s Chris Sacca has chosen to invest in. The graduate from Georgetown University founded the company Lowercase Capital in 2010 and has made dozens of lucrative investments in the time since. Instagram, Kickstarter, Uber, and Twitter are all businesses he made early-stage investments in after seeing the market value. Each of the companies serves a specific niche of people and focusing on that specific market instead of trying to cater to a wider audience has given these businesses the opportunity to succeed. Chris Sacca investments all have a clearly-defined market to help them thrive.
Set Your Company Apart From the Competition
To be successful, your startup must have something that sets it apart from the competition. Products offered by your business should perform in unique ways and have patents to keep rival companies from copying your designs. If your startup offers services to clients, there should be something special about your process that makes it memorable. Even if you offer products or services that are similar to others on the market, if there is something that sets your company apart from others, you can appeal to investors and launch a successful startup.
Secrecy is also key to attracting investors. If you have broadcast your startup’s products or technology without protecting it, competitors can quickly steal your ideas. Protecting your ideas is a crucial aspect of success and your company is not likely to attract investors without some type of protection in place.
Create a Business Model
If you want your business to thrive, you must have a plan in place to serve as a roadmap to success. No company can thrive without a good business model. This plan determines how the company will make money to turn a profit and guides your business as it grows so it stays on track. Not only does a solid business model show potential investors that you have a plan for success, but it also proves that you are passionate about your company.
Few companies succeed without a business model. If you do not have a plan for turning your idea into a lucrative company, you will be unable to make money to keep your startup afloat. Even if your business does not initially turn a profit, a business model can help you see the bigger picture and show investors how you intend to run the company.
Make Yourself Your Company’s Greatest Asset
Most investors do not just want to hear a good idea when they listen to your pitch. They are also analyzing you to see how passionate you are about your business. Driven founders with mediocre ideas are more likely to succeed than those with brilliant ideas who lack the proper motivation. Because of this, investors are typically more interested in startups founded by people who exhibit the following characteristics.
People with these qualities quickly become excellent assets to their companies. If you can show how dedicated you are to your startup, investors are more likely to take a chance on you because determination and perseverance are vital for succeeding in the business world.
Securing an investment in your startup can seem like a daunting task, but it is a crucial first step to launching a successful company. It is not enough to have a good idea for a company to attract the interest of investors. By implementing the four aspects above into your startup, you can build a solid foundation for a successful company that is more likely to secure the investments it needs to grow.