Having sat on both sides of the desk as an investor over the past 20 years and as a capital seeker as well, I could tell you, there is some eye catchers that are going to pop out at you and really grab your attention versus those are the deals that are going in the to-do file.
Here is what investors are generally looking for:
First of all, I think patents
If you see a patent, you generally know you got something there that nobody else has. It’s worth taking a look at. Trademarks are pretty good, too.
Skin in the Game
Additionally, we like to see capital invested personally, call it “skin in the game.” We want to see management teams that have a personal stake in the business and believe enough in it to put their own money behind it before they come and ask the capital provider to add to that.
This is a huge category for us. Executive summaries reveal gems and big names and experience. Companies need pedigrees.
It’s good to look at a company and see, have they made it to their stated goals so far? That’s a good indication of how they’re going to handle the capital infusion you’re thinking about providing for the investor.
The value of the idea, or the product, or the service on a monetized basis
In other words, what’s the market for that idea, product, or service look like? Is it a multi-billion-dollar market or is it just a niche? A couple million here and there is a big difference.
Growing market demand versus shrinking market demand
This one is pretty obvious. Everybody wants to get in on the ground floor.
Revenue growth year over year
We always take a look back and see what they did last year or the same quarter and look for the trend. You’ll want to see that trend line steadily up. If you see it spiking up, it’s even better.
Strategic partnerships are also very, very important
Who is this company aligned with? Who is supporting the business model and enhancing it as well?
Lastly, intellectual property which is a little esoteric, but nonetheless it can be valuable
It can be booked as an asset, and it is something to take a second look at.
These are the things that really catch the eye of the investor. If you’ve got some of those things in your business plan, during the three-minute review, they’ll pop out.