What is the most important factor in an investor's decision whether to invest?
I know there are several things to get across in an investor pitch, including problem, solution, size of market and team, but what is the most critical thing to emphasize? Is it the team or the market or something else?
The most important thing I promote to my real estate investor partners are systems. All the things you mentioned are important and critical parts of a good system or business model.
Simple really : three things.
1. The people : their background and can you trust them with your money.
2. The product : does it improve the lives of your target end-user.
3. The protection : ip protection and can you build a deep enough moat around the product/service to make it impregnable by the competition.
GOOD LUCK, you'll need a lot!
#1 - How long before the investors money will be returned/regained (projected). Then the long term estimated financial growth/profit of the company.
#2 - Risk estimate. How risky is the venture. Is there a high likelihood the invested money wont be returned? What is competition like?
The team will get you to a decision opportunity and to me the clincher is if the investor can "feel" the pain you are addressing and "imagine" the relief your solution will bring.
People! Who is going to get this done? Clearly it is THE TEAM!
It is how much money you will make. But that has several dimensions -- it depends on (how big is) your market, is the team credible (I.e. can they execute your plan to make a lot of money), is there a real need for your solution, or is it just a nice-to-have? Basically you have to show that you have a solution to a big problem and a team that can deliver a solutions and doing so will make a lot of money.
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While getting return on investment is always a priority, I've seen investors look more to where key personnel can take the company. The best performing companies rarely do now what they initially intended (Google and Facebook are obvious examples). If you can make money early with a killer application, know how to maintain market share, have good ideas on how to grow in other sectors, and be flexible and creative in a long-term commitment, I'd think you'd be a tempting investment.
Ultimately it boils down to sales versus costs. You can control costs.
Your management team and advisors. These are the people who will be charged with carrying out any business plan and dealing with the threats and opportunities that will occur. Also, they are the folks whose contacts, resources and reputations will help lead to financing. Almost by definition, your advisors have the experience you will need to ground your idea/plan in reality. Lastly, a good team will attract other good people to your team.
Depending on what you are investing in, time, money or business? Do not be afraid to ask questions and check them out whom ever they are, don't always believe what they say, no matter how convincing they maybe... Don't go to the negative, such as, problems, hope, maybe; that will tell you t b run away fast...
The most important factor in their decision will vary depending upon several factors including the type of investment and the stage of the company.
However, don't expect them to make a "buy" decision in your pitch. The goal should be to generate enough interest that they will want to take the next step.
From our work with clients, we've determined that for early stage companies- two conditions always exist before the check is written.
How you make your money and how they are going to get their monty back.
How much money is oin it for them?
They are only interested in the bottom line.
From my experience of investors, its how much money they will make and the risk profile..... They are after the end game after all. And of course "An investor" isn't a specific creature with definite habits some are risk averse, some are risk crazy, some will want to be sold the dream, some will be hands off and say here's my money if I don't make 10 million out of you I will hate you.... and every shade in between