If you think you’ve got a great idea for a startup, join the club! Investors are no strangers to plucky, energetic elevator-pitch specialists who think their products will change the world. If you want really want to secure incubation for your idea, well, it’s not going to be easy, simply because there is a lot of competition. It matters little about how groundbreaking your idea is if you fail to convey that to the investors. Let’s go over a few reasons why investors won’t trust your venture with their money.
The investors must be able to see the product being realized, and it being used the way you said it would – by real people. If you are unable to actually build the product, or if the end result is still far from being marketable, you get minus points on the practicality scale!
The CEO’s personality to be exact. Investors like to see a rugged, flexible and intelligent CEO in charge of their money; someone who has a temperament for those difficult days when the expenses outrun the revenue stream. If the CEO comes across as immature, rigid and allergic to suggestions and modification of the plans, then investors may be put off. The same goes for your team – constant scuffles and irresponsibility do not invite investment.
If investors simply don’t like the CEO and/or the team, then nothing can get them to sign that check. It’s not always about the investors judging your character and integrity. They may be put off by your inexperience or your unfamiliarity with the industry and thus deem the chances of your success to be minute
An idea that is likely to be marketable and profitable will be fresh and exciting. If investors find you trying to work with old ideas that were too clumsy and inefficient to succeed, they will be tempted to wonder what can a startup like yours can do what entire industries behind the failed idea could not. If you feel that the idea could use a makeover before the average customer would like to be a part of it, you’re probably right.
It is surprisingly common for startups to ignore the crucial issue of expenses and profits! Do not give in to the temptation of assuming that your revolutionary idea will make revenue streams.To bring investors into the fold, a clear cut business plan that earns money as soon as possible is a must. If your plans have too high an initial cost, you’d do well to bring them down.
The Investors Themselves?
It’s perfectly possible that the fault lies not in you, or your team, or your idea. Perhaps the investors just don’t understand what your plan is all about, possibly due to a different education or an inherent bias. A tech-based start up may prove to be too confusing for veteran investors, who’d rather invest in a simpler venture than trouble themselves with programming and “conversions.” They may even smell danger after noticing that no other investors are backing you.
If investment is hard to come by, consider taking personal loans for business, such as unsecured start up loans in CA. If it’s someone else’s money funding your ideas, you can’t expect to have it easy!