MaRS Library What investors want in place when they invest in your startup
Assuming that a startup meets all of its investment criteria, investors generally look for the following when they consider making an investment in a new business:
Your startup has made progress working on creating and delivering your product and service.
- Investors generally dislike pitches where all of the inputs are “theoretical” and it is evident that the entrepreneur is waiting for investment money to get started.
- Investors, themselves risk takers, like to meet entrepreneurs who have forged ahead and launched the creation of their business while seeking investment on a parallel path.
A strong execution plan
- List the milestones critical to the success of your new startup, with the specific goals, timing and funding amounts required to achieve those milestones.
- Include a brief list of major tasks you have completed or need to complete to launch your organization and accept outside investment.
- You have attracted a strong management team, or
- You have put the nucleus of that management team in place and plan to add additional members as capital is raised.
A viable business model for your startup
- You’ve figured out a way to make money from your idea. Remember, the best technology, product or service goes nowhere without a sustainable business model.
- You have a detailed list of assumptions you’re making about the business.
- You have determined the amount of capital you require, and the timing of these requirements.
- You have forecast the financial results you expect to generate.
- If applicable, you have taken the necessary steps to protect ownership and to enable access to any intellectual property that is critical to the operation and success of the business.
With these resources and information about the business in hand, you are now ready to approach prospective investors about your new business opportunity.
Thinking of raising money? We’ve created a free online course to help you get investment-ready. Check out Introduction to Investment Readiness and learn useful tips, tactics and strategies to prepare for your seed fundraising round.
Kawasaki, G. (2004). The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything. Toronto: Penguin Canada.
- Financial statements: Balance sheet and income, retained earnings and cash flow statements.
- Convertible preferred stock: How investors maximize their return on investment (ROI).
- Smart grid.
- How to meet and engage an investor for your startup.
- Licensing new technology as a way of financing your innovation.