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Top 3 Things That Investors Look for in a Startup Business

October 02, 2013

Investors look at a number of different factors before deciding where to allocate their funds.

As the saying goes, good ideas are a dime a dozen. While having a sound product or service offering is critical to the success of a new business, entrepreneurs need more than that if they want to earn the funds of investors.

Investors look at a number of different factors before deciding where to allocate their funds, from the reliability of the entrepreneur to the staff he or she employs. Here are three of the most critical factors that entrepreneurs must nail to maximize their chances of securing funds from investors:

1. A dynamic line of product and service offerings in a growing market segment

Businesses often tout their products or services as being “one of a kind,” but that isn’t always a good thing among investors, The Huffington Post asserted. Potential investors want to know companies have a dynamic offering so that if a single product doesn’t light the market on fire, they can make the adjustments needed to stay competitive.

Of course, being involved in a booming market segment or industry can help as well. For instance, software is a burgeoning sector right now, so even if the first solution offered by a company isn’t an immediate hit, they can add on to it and modify it in order to try again.

2. Sustainable revenue models

Although a business may start small, not every company wants to stay that way. With that in mind, it’s critical that firms have sustainable revenue models that enable them to scale with demand. Investors like companies that have the potential for upward movement.

3. A healthy team

The staff behind the business is often just as important as the products they sell. Everyone from management to the entry-level workers need to be on the same page and working together. A team in unison is an attractive proposition for any investor.

Sources:
http://www.sbcountyadvantage.com/media/docs/EZN-Top_7_Things.pdf
http://www.huffingtonpost.com/marty-zwilling/6-competitive-elements_b_876676.html

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