Investors are looking for concise statements related to your core idea and a leader that they think can execute on the overall plan. Do you have intellectual property that you are leveraging to build your company? Does this provide a competitive advantage? Will this enable you to build revenue quickly vs. the competition? These are the questions that need be answered to be successful.
Even if you don’t have revenue to show the investor, financial projections will be of particular interest to the investor. The key is to make them in the realm of possibility. Every new venture lends itself to over-selling how much it’s going to make. Savvy investors will know if the numbers are inflated – most even know and understand that the business landscape might change for the company, thus changing the revenue outlook. The idea is to be consistent and to just not say that it’s a $10 billion market and if I get 1% of the market – we are rich. This isn’t realistic and shows that you aren’t looking at your numbers straight.
Also remember that they are looking for a return on their investment and that is the foremost thought in their heads. And that brings us to the valuation of the company and what that means regarding the percentage of ownership (or return) that the investor will receive in exchange for his funding. In simple terms, if a business is looking for funding and $50,000 of investment equals 10% of the company. The company is valued at $500,000. This is the number that will dictate more of your funding discussions as you move forward. The question that has to be answered is, “Is this company worth the money?”