In 1996, Larry Page and Sergey Brin, students at Stanford, came up with an idea for a better search engine. Page and Brin’s insight was that a webpage was likely more valuable if a lot of other webpages linked to it. Accordingly, their new search engine – Google.Stanford.edu– ranked highly-linked pages higher, thus offering better search results.

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The two young founders were soon asked to give a demonstration of their work to legendary Silicon Valley investor Andy Bechtolsheim. He was so impressed that he wrote out a check for $100,000 on the spot, to “Google, Inc.”

 

The problem was that the two young founders were unable to deposit the check because they had forgotten to incorporate their business, so the check sat in Sergei’s desk drawer for two weeks until they completed that step.

 

I’m sure you’re thinking that Google is a unique story, but I am here to tell you it is not; it’s almost an ordinary one. It’s not unusual for a startup to get a sudden influx of cash from inverstors and they must be prepared to process that investment when they do.

 

This all then begs the question: What exactly makes a business a good investment to a so-called “angel investor?” If you’re looking for investors, here are some of the top things they look for in a business:

 

1. Opportunity: Bechtolsheim saw an opportunity in Google unlike any other, and while that is rare, what Bechtolsheim was seeking was not: namely, an opportunity to invest his money and make a good return.

 

Do you ever watch Shark Tank? Same thing.

 

Presenting your business as a great opportunity is vital. Investors need to see that by helping you, they can help themselves, and that comes from not wanting to miss a golden opportunity. Your job then, as the entrepreneur, is to show them that your idea/business is that opportunityand offers something unique to the marketplace.

 

2. The competition: Google, at the time of its initial investment, had competitors in an emerging field, but none that dominated the market. Remember AltaVista, Ask Jeeves or Lycos? Today, in most industries, there is a lot of competition. As such, you need to show investors that you not only know who the competitors are, but that you are better than them.

 

3. The financials: Again, let’s think about Shark Tank. Kevin O’Leary, Mr. Wonderful himself, is all about one thing: Money. And the money is based on financials. Does the business show enough promise and profit that the investor will see a substantial return in a short amount of time (a few years at most)?

 

The financials will tell you.

 

Knowing your numbers is critical in showing investors you mean business. Investors want to know what you’re doing with their money, and why. Having a business plan with realistic financials is critical.

 

4. The team: Bechtolsheim believed in Page and Brin, and indeed, few things impress investors more than a great team. Often that is what the investor is really investing in, the team. As such, the quality of your team is vital in selling your company’s worth to an investor. A great team has credentials, experience, smarts, contacts, charisma and mad skills.

 

5. You: In order to run with the big dogs, you need to act like one. Show investors you belong. Explain why you deserve their money, and what they can gain from investing in YOU. Because in the end, you are your businesses biggest asset.

 

Bottom line: There are a lot of ways to find investors these days, and it can be a challenging process. Making sure that you have these five things down pat will go a long way to ensuring that when you do find that right investor, and get to make that all-important pitch, you will stand out from the crowd.

 

Investors are out there, and they wantto invest in great businesses. Give them that chance. Prepare to impress, and then prepare some more.

 

 

About Steve Strauss

 

Steve Strauss Headshot New.pngSteven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business SuccessSteven D. Strauss

   

Web: www.theselfemployed.com or Twitter: @SteveStrauss

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