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    5 Replies Latest reply on May 12, 2008 3:58 PM by DomainDiva

    What do investors look for?  HELP

    Sako7STW Newbie
      I have never really talked to many personal investors. What kind of deals do they look for?

      Do they look for deals like someone needing financing? Like at set rate for 10 years? I would think that this would be appealing do to a guarenteed return for an extended period of time.

      Do they look for something that would be secured against something like property or equipment?

      How about someone needing money to assist with a down payment to secure a loan? How would you go about setting that up?

      The reason I ask is we have a few local people that may be interested in investing in our business but I am not sure how to set this up to be appealing to them and lucrative at the same time. Also we still have to be able to make money.
        • Re: What do investors look for?  HELP
          LUCKIEST Guide
          What do investors look for. Good Question

          An investor is looking to invest in a stock or a business in which the investor can make more money
          (over the long run) than in a bank and hopefully get their money back at the end.
          Every deal is different, like every ball game is different.
          This is why there are professionals like Lawyers (to protect) and Accountants (to review)
          and even SCORE. SCORE is FREE (and can offer GREAT advice).
          One of the first items an investor will want to see is a Business and Marketing Plan.
          Talk to the Professionals, but come prepared.
          Good luck, LUCKIEST
          • Re: What do investors look for?  HELP
            Lighthouse24 Ranger

            As Luckiest wrote, investors look for a variety of situations and deals (of course, all involve them making money on the money they invest).

            As for your first scenario, it's seems unlikely that an investor would provide a ten year loan for a start-up company. In small business, one of three things will happen within the first year or two -- the business will: (a) go belly up, (b) become profitable and self-sustaining (but limited in terms of growth potential), or (c) become established and ready for explosive growth/expansion with another round of outside funding. Seed investors bet on (b) or (c) and expect to get their money back (and more) when the business is stable or when a growth funding is provided (two or three years max, I'd think).

            If the owner had security (property, equipment, or other capital assets that might require long term notes), additional sources of funding (besides investors) would likely be available.

            It is usually 4F investors that provide the cash for a down payment to secure a larger start-up loan (cash to buy a franchise would be a common example of this). 4F investors are the founder, family, friends, and fools -- in case someone isn't familiar with that.

            Don;t count to heavily on local people who "may be interested in investing." I've seen them string small business owners along for months and ultimately do nothing. Serious investors either are or they aren't. If they aren't, they don't waste valuable time suggesting that they might be. If they are, they actively seek information, ask questions, and propose a deal within a few weeks.

            What you want to "set up" is a solid business plan and financial projection -- and if that appeals to the investor, then you'll worry about hacking terms to suit both of you (in other words, for seed funding, don't worry about trying to develop and pitch a deal that's appealing -- focus on developing and pitching a business plan that's appealing).

            Hope this helps. Best wishes.
              • Re: What do investors look for?  HELP
                Lighthouse24 Ranger

                I should have included this in my previous post as an answer your subject line question, "What do investors look for?" The main thing they look for is a principal participant in the business who gives them confidence that what the plan says on paper will actually come to pass in reality. A lot of people who seek start-up funding have the passion to build a business and make the investor money, but they don't have (or don't demonstrate that they have) the required knowledge, skills, and experience. Without "know-how," success depends on hard work and a lot of luck (which is gambling, not investing).
                  • Re: What do investors look for?  HELP
                    Sako7STW Newbie
                    The business venture were looking into is more of a simple location change as clientel is already established in both locations and most of the existing clientel will follow to the new location. So really its more of a expansion. Does this make much of a difference in attracting investors?

                    One of my questions I didnt state in my original post is how do most investors expect to be paid back? Is it more by a percentage of your income? Set interest rates? Anything one needs to really avoid or watch out for?
                      • Re: What do investors look for?  HELP
                        DomainDiva Ranger

                        You need to watch out for predatory investors or people posing as 'consultants' that will represent your firm to various 'investors'. I just had a brush with a company from the Middle East...very scary.

                        These people will give you a contract that puts the burden on one side only and requires that the company being funded 'kick back' to the consultants/predatory investors a percentage of the actual funds contracted for plus a stake in the company.


                        If someone cannot present anything the other way.
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