Is Your Venture Ready For Outside Investment?

So you have a business and need money to grow. One of your options includes turning to external investors. But is your venture truly ready for outside investment? If you’ve been grappling with this question; then read on. Based on years of experience, we’ve put together this list of essential elements your venture needs to be ready to attract external investments:

The Will

In the early days of your venture, you are usually accountable only to yourself (and perhaps a partner and/or spouse). If you later determine that you want outside investment, you have to be willing to be accountable beyond yourself. In essence, you must have the will and ability to be accountable to a larger circle of investors and stakeholders, and fully understand the risk and rewards of the same.

Ability to Scale

Like it or not, most investors won’t consider your venture unless it has the potential for revenue growth. Thus your venture should be positioned in a way that makes it possible to easily scale up. A venture that could potentially address a large future market is more likely to attract external investment as opposed to one that has limited growth potential.

A Clear Plan

You should have a business plan with a clear, comprehensive strategy. It’s important to ensure that your plan is realistic and transparent, with clear financial projections, a sales and marketing plan, and any relevant details that pertain to your venture. It is equally important to be able to clearly show and articulate the gap in the market your venture aims to fill and/or the specific problem/s the venture is solving. This is a key requirement to attract outside investment.

A Promising Team

A great idea isn’t enough to justify an external investment. Before approaching investors, you need to have a strong and reliable team that will follow through on every commitment. Remember, investors invest in people — and so having the right people on board is essential to secure funding.

Proof of Success

As a startup, you might not have reached a stage of high profitability. However, you need to be able to show investors that you are likely to succeed and become profitable in the future. Any data — from successful marketing campaigns and a growing customer base to service/product adoption rates — can act as proof of success. The more hard data you have to back up your claims, the better. Additionally, you’ll want to be able to show how everything fits together — the compelling story behind your venture is equally important to investors.

An Exit Strategy

Even though you don’t need to “pay back” your investors, they will expect a return on their investment. Thus, most investors will consider exit opportunities prior to investing. You should be able to provide potential investors with a clear exit strategy of some kind, whether it’s through acquisition, going public, or selling shares. If you plan on running and owning your venture forever, then the external investment might not be right for you.

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Do you have all these elements in place? If so, you’re ready for external investment. There is no shortcut to the process of securing an outside investor. But with the right preparation, the results will be well worth your effort. Here at GMGB, we believe that there is no “one size fits all” formula for potential ventures. We offer a customized approach to suit every venture we evaluate, with thorough pre and post-investment guidance. If you think your venture is ready for investment, feel free to reach out, and let us help you take your venture to the next level.