Performers will prevail

Investors look at the team’s passion towards their business and their hunger to make the business idea a reality.

Do you want to execute your innovative business idea but do not have sufficient funds? Are you an entrepreneur looking to raise investments for the business? There are many factors that investors are looking at before betting on you.

“The business is not just about an individual and his idea but also about the team and their hunger to make the idea in to reality. The investors look at the team and their passion towards that business. The see, ‘how good is the idea’, ‘Is business idea addressing the core problem?’ What kind of value addition the business will provide to the customers? Scalability of the business is other important aspect they consider while investing,” said Hari Krishna Verma, co-founder, Creya Learning.

The entrepreneur’s seriousness and his homework on the subject area also count during the process. He should also be flexible and able to learn during the process, he added.

There are different types and levels of investments. Seed funding is an early investment, which can also be raised from friends and family. It is a high-risk investment that is needed to take off the business from the conceptual stage. This investment will be used till the business generates revenues by itself.

“These informal investments will also bring confidence in the potential investors that come at later stage. The confidence will be stronger once they see friends started investing apart from the family. It also proves that there are people around who backs the entrepreneur’s idea apart from himself,” says Murali Bukkapatnam, president, TiE Hyderabad.

The concept of seed funding is still not so friendly for the entrepreneurs in the country. There are very small group of people in the angel community (outside investors), who are going to invest in you to take the business forward during the conceptual stage or just with great idea. The business should gain a small customer base before getting investments from angel investors.

For instance, If a business is aiming for 1,000 customers, the angel investors are investing when the business has built up at least 5-10 customers. The venture capitalists will only come when the business has 200 customers, says Hemanth Satyanarayana, co-founder, Imaginate.

The investments will also be influenced by macro economic conditions. For instance, more liquidity in the market will give to raise more investments. If an investor has `10 crore, he sees all the possible ways to invest and get that money in to different businesses. However, if he has `1 lakh, he will do all the due diligence and invest the best idea possible by filtering different businesses, Murali said.

The entrepreneur should also study the market conditions before venturing in to the business. The market conditions will even dictate the success of the business. Even if the entrepreneur has a great business idea, focused team and great implementation in process, these will not the result in success of the business with improper market conditions, he added.

Tags: investors

Category: Business, Business News