Basic Elements for Attracting Investors in a New Business

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Every new business has a different story to tell when attracting angel investors. There’s no magic formula to assure raising capital when starting a corporation. But there are some common factors that are always in the forefront of angel investor assessment.

The first detail to remember is that a primary concern for investors is the size of a market and how the company’s product meets a demand by consumers. A key attraction for any new business is that it addresses a presently unmet market deficiency or problem. A new business has to match its purpose to resolving some existing circumstances.

The optimal situation for outside investors is a company whose product is adaptable to other uses. Investors want to know if an addition of new features or a slightly different design permits the product to attract new uses or different types of consumers. Maybe a product is adaptable for selling to several industries instead of merely the initial target audience. Or perhaps a product can become more sophisticated in order to expand its appeal.

Products that don’t meet these criteria are limited to a single vertical market. They still make a great business to start, but they don’t require large amounts of outside capital for growth. This is good news for a lot of new companies. Many small business startups today can reach their markets quickly and attain positive cash flow faster than ever before. Angel investors that focus upon scoring from singles instead of home runs will find these new businesses represent compelling opportunities.

The top consideration, therefore, of angel investors is the capability of management to drive the company to its ultimate objective. Experienced managers are obviously a plus. However, the main focus is how management’s plan for the new business matches the market potential. Grandiose plans don’t necessarily attract investors. Instead, they’re looking for mangers with a realistic plan. Success from starting a new business is all about making sure of hitting a reasonable target.