What investors look for in entrepreneurs

As you can expect, the room was bursting at its seams with a standing-room-only crowd of entrepreneurs hungry to learn the tricks of the trade. In this column, I distil the most important lessons shared by the esteemed panel of investors. If you are a startup or thinking of starting one, these tips will be of invaluable use to you. 

Remember that any investor is in the business so that he or she can multiply their investments in a short period of time. They are interested in businesses that can quickly grow big. That explains why Internet-based companies are preferred by the investors which do not require big investments in physical infrastructure. 

Just having a great idea is not enough. You need to demonstrate that you have converted that idea into reality. You need to show the investors that you have a great team with complementary skills. Many times, investors show high importance to the team as much as for the idea. So, make sure you knit together a good team. 

Just as the investors will do intensive and extensive background check on the entrepreneurs, it is equally important for the start-up founders to do a similar background check of the investors. It is very important to know the area of interest of the investors and also figure out what sort of companies they have invested earlier. Approaching an investor who has interests in Financial Tech with an e-commerce idea is a classic mistake. 

A good way for entrepreneurs to build their reputation is to be part of Accelerators. These are programmes conducted by professionals who are seasoned entrepreneurs themselves who train young entrepreneurs on various requirements. Think of this as a coaching school, the equivalent of an IIT coaching centre for those aspiring to crack the IITs. It’s an intensive crash course in entrepreneurial investing. 

The most important factor that impresses investors are the numbers. Especially sales numbers. If you can show that you are able to generate revenues and profits, then you are bound to get the respect and attention of the investors. 

You can be certain that investors will ask this question to you. When it crops up during the conversation, you need to have a clear answer on how much money you need, why you need it, how will you deploy and when will it result in growth. An investor is always impressed with people when they get clear answers to these questions. So, get a good grounding on this before you meet up with your investors.