What will investors look for when evaluating your proposition?

So what do those investors look for when reviewing your plan or listening to your pitch? If they are professionals they will have a ‘hit list’ like the one below. They will want you to score highly for them to look at your business seriously. Try and make sure you can score as highly as possible or have a good answer to any of the negatives that may apply to you.

The Business Model

Positive Attributes:

  • High degree of interactivity, 2-way communication, customer has special capabilities
  • Operating cost structure below industry averages
  • Not forced to compete on price
  • Business model is easily adapted to changing market requirements
  • Revenue sources are diversified
  • Potential for strategic partnering or buyout opportunities

Negative Attributes:

  • Primarily delivers the company’s information to the customer
  • High cost structure makes it difficult to pass efficiencies on to the customer
  • Primarily a low-price provider
  • Business model is designed for specific use only
  • Single source of revenue
  • Of little strategic value to other businesses

Market Position

Positive Attributes:

  • Early occupancy of the market space
  • Target market is specialized in terms of interest, industry, or practice
  • Target market is sufficiently large
  • Target market can be reached easily and proprietary information gathered
  • Market position is conductive to partnering or buyout
  • There is significant product/service differentiation and/or innovative appeal

Negative Attributes:

  • Competes heavily against established companies
  • Market is broadly defined; lacks clear focus
  • Target market is too small to sustain the business model
  • Target market has few avenues of communication and inconsistent usage
  • Market position has little synergistic appeal
  • Seen as too much like competitors

Intellectual Property

Positive Attributes:

  • Key technologies are patented by the business
  • Proprietary software that increases efficiency, adaptability or reduces cost
  • Special systems design and implementation know-how exists which increases efficiency, etc.
  • Trademark, trade name, and brand potential is being exploited
  • Business offers proprietary, copyrighted content
  • Key expertise is on staff and locked in

Negative Attributes:

  • There are no proprietary patentable technologies
  • Software is commonly available or has not yet been developed
  • Systems design is inflexible and must be redesigned to accommodate changes
  • Little or no establishment of brand. Names have little potential
  • Content owned by third party; available elsewhere, or in early stages of development
  • Expertise is subcontracted for; no employment contacts or financial incentives exist

Risk Factors

Positive Attributes:

  • No regulations expected
  • No risk of intellectual property infringement
  • Little risk of obsolescence
  • Little likelihood of being displaced
  • Revenue not vulnerable to economic climate
  • Adoption of the activity on the Internet is proven

Negative Attributes:

  • Government regulation is being considered or in progress
  • Intellectual property protection on key methods or systems is being pursued
  • High risk of obsolescence
  • Vulnerable to ergonomic limits
  • Revenue is cyclical and sensitive to economic downturns
  • Adoption on the Internet might not materialize

This quick guide was developed by Paul Gardner of funding consultancy C2Ventures: http://www.c2ventures.com

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