A start up is often the product of a vision, a sensational new business venture and the confidence of an idea that can be turned into profits. As exciting and energizing as all this sounds, a start up can often come crashing down even before it begins because of lack of funding. As they say “ cash is king” and running into cash-flow problems is a real issue with companies looking to do something big. Here are five things start-ups should do to secure better investments.

Value and the vision

Tony Hsieh, CEO of Zappos, said, “Chase the vision, not the money; the money will end up following you.” This is so true because a start-up has to have a certain unique value proposition to offer and the vision to create a magnificent value for the investor

The value proposition offered by a start-up to a potential investor needs to be:

• Compelling
• Backed by practical vision
• Built on the opportunities that the market presents

Developing a business plan

Even as a compelling value proposition is an extremely attractive reason for an investor, he also needs to see facts, numbers and forecasts. This simply means that a start-up needs to have a really solid business plan which brings together important aspects such as:

• Financial stability,
• Proof of the success of the start-up
• Marketing strategies and
• An all-encompassing business plan.

Having an in-depth and correct understanding of market size and market opportunity is an extremely important component of such a solid business plan.

Team

The adage of ‘teamwork works’ is an extremely important one for any start-up that is looking to secure investments. The potential investor wants to know who the people behind the product or the company are. More importantly he also wants to see the team members share the vision and get along with each other. Constructive criticism and arguments are all fine but if the team is not pulling together to make a start-up a successful one, then the investor is likely to get cold feet.

Unique product

A start-up has a higher chance of succeeding in attracting the right kind of investments if it has a unique product, idea or service to sell. Ideally, this creation of a unique product or an idea should have been done after intensive market research. So basically, a start-up should be able to convince an investor that it is capable of filling a market void.

Proof of stability and stamina

Richard Harroch, a well-known venture capitalist says, “It’s almost always harder to raise capital then you thought it would be, and it always takes longer. So plan for that.” It is extremely important for a start-up to offer proof of stability and endurance to a prospective investor. This proof of stability lies in important aspects such as having a solid plan for the future and the ability to cater to the potential changes in the business environment that the future will bring.

Thus, it is extremely important for start-ups to have all the important components in its business plan and vision in order to attract the right kind of investors effortlessly. Incisive thinking and an understanding of what an investor wants is critical to a start-up’s success