Choosing the right investment funding opportunity can set your business apart and increase your chances of success
Investment capital is one of the best ways to finance your business. Unlike loans that you have to repay up front with interest, with investment capital, you only start paying your investors after your business starts making revenue.
Choosing the right investors can determine if your business flourishes or fails. If your firm is at the point where it requires capital, you should conduct proper research on potential investors and find one whose goals and values align with your brand.
Selecting the right investment capital opportunity requires understanding what the investor brings to the table. Here are reasons why you should consider investment funding and tips for choosing the right opportunity:
Considerations for going the investment capital route
Selecting the right investment scheme for your business determines its overall success. Below are three reasons you should consider going the investment funding route:
1. Reduced paying pressure
Investment funding doesn’t restrict you to the rules that bind other funding opportunities, such as loans. You aren’t held by tight deadlines, huge interest, and upfront repayments. This eases the pressure of making instant repayments and allows you to focus on your business.
2. Valuable expertise
An investor with relevant business experience can provide you with valuable expertise. You get to take advantage of their knowledge, experience, and advice. Looking into their mistakes helps you understand and avoid repeating the same in your business. This improves your chance of prolonged success.
3. Meaningful connections
An investor can hook you up with people who can help take your business to the next level. Most successful investors have a collection of solid contacts that can benefit your business. They can connect you with manufacturers, suppliers, and consultants that help to streamline your supply chain. With the right connections, your business gains a competitive advantage over competitors.
As you can see, there are numerous benefits to seeking out investment capital for your business. But how do you find the right investment partner? Read on to find out.
Tips for choosing the right opportunity
Selecting the right investment capital opportunity can determine the success of your business. Here are six questions to ask when looking for an investor:
1. Do their goals and priorities align with yours?
Investors are members of your board who can significantly impact your firm’s culture by either promoting or derailing your vision. For that reason, you want to choose investors who are compatible with your company’s culture and brand. So be sure to evaluate whether any potential investor’s brand and values are a good fit with yours.
2. What have they funded in the past?
Do your research and identify when your potential investor last funded a company or project and how their investments are performing. An investor whose other projects are performing won’t place excessive pressure on your business, while one whose investments are struggling could try to use your company to recoup their funds, thus putting unnecessary pressure on your team.
Also, assess an investor’s history and finances to determine if they can be counted on to provide further funding if needed. Businesses often require several rounds of funding before they start making revenue, and bringing in new investors every time you need an influx of capital can diminish your stake in your business.
3. Will they bring value to your company beyond funding alone?
Research how the potential investor can add value to your business besides funding. When you partner with an investor, you also gain access to their networks, industry influence, and business expertise. In some cases, non-financial gains are the biggest benefit of working with an investor.
Some investors may make your business more appealing simply by being attached to it. Successful people want to be involved with other successes. Having a productive investor on board may encourage others to invest in your business.
4. How committed will they be to your company?
This is the flip side of your research into other investments they’ve made. Yes, it’s great that a potential investor is involved in several well-performing projects, but you don’t really want someone who’s so overextended that they end up neglecting your business. So you need to know how much energy and time a potential investor plans to devote to your company.
Ask them about other boards they serve on and the kinds of communication they expect. Finding out how often the investor plans to interact with your company and how much access you’ll have to them helps determine their level of commitment.
5. How well will they blend with your existing team?
Working with an investor who costs you employees can cause a significant setback. So you need to find out if the investor can work well with your team and avoid any serious personality conflicts. Look for an investor who blends in with the existing team to avoid misunderstandings that can lead to divisions in your company.
6. Does the investor understand your industry?
Industry familiarity is critical when choosing investors for your business. You need investors who understand your industry to ensure that your goals and expectations are aligned. Have a conversation with potential investors regarding their experience. Find out if they’ve invested in your industry before and gauge their understanding of the sector in general.
Be sure the investor understands the challenges of your industry and is willing to be flexible in dealing with them. This way, they won’t be surprised when potential pitfalls occur. Sharing an understanding of your industry and market ensures that you and your investor can work in alignment to tackle all obstacles.
When considering investment capital for your business, you have to be on the lookout for the best opportunity. Choosing a good investor whose values and goals align with your business is the first step towards attaining organizational success. You also need to assess any potential investor’s industry familiarity, commitment to your business, previous investments, and goals to determine if they’re the right fit for you. It’s also a good idea to consider calling in some help.
Get help from the experts
If you want to be able to choose the right investors and get them interested in your business, you need to be scaling. It’s difficult to do alone, but having a rockstar sales team can help.
At MetaGrowth Ventures, we specialize in building high-performing sales teams. We support founders in building out their teams by making sure they hire the right personnel the first time around. Our rigorous process allows us to get you the right candidates for the job. We also know that top sales teams need top-quality training, so we prioritize it. If you haven’t yet memorialized and automated your company’s training, we’ll help create a digital library of on-demand training content for your team.
If you’re ready to start scaling your business and attracting investors, contact us today.