Raising Capital: 5 Reasons An Investor Won't Invest!
When it comes to raising capital for your company, it is important to understand the difference between objective and subjective investors and the reasons investors won't invest. The subjective investor is some how connected to you. Often referred to as "Friends and Family", but in reality they are investors with a connection to you directly through a common connection like your friends and family. These investors, or friends, believe in what you are doing and invest in your business. At some point, a business who seeks private investors has to move beyond subjective investors to the world of objective investors. Objective investors examine the overall business model and investment opportunity.
Objective investors see dozens or more offerings each year. How do you think they determine which businesses to invest in? They look for reasons NOT to invest. By examining your complete business model and investment opportunity they can determine red flags. 5 Reasons an Investor Will Not Invest: 1. Incomplete financials and/or business plan (market/sales strategy, operational information, barrier to entry not established) 2.
Complex or confusing message within the investor documents regarding business model or investment opportunity 3. Structure of the offering, perceived cost of the investment relative to a high valuation or unclear exit and return to the investor 4. Inexperience or incomplete management team, and/or attitude of the management conveying a sense of entitlement or resistance to advice & counsel 5. Specific industry focus or niche marketplace that limits the potential number of investors Many of the reasons for no-go investment decisions can be identified and remedied before the investment process begins. How will your company determine if you business model and investment opportunity is investor ready? Have a funding application and/or business assessment completed by a legitate company like Launch Funding Network at http://www.launchfn.com/id70.html.