According to a survey conducted in the year 2016, it was identified that more than 22% of the Pakistani youth expressed a dire interest in wanting to start their own business as opposed to getting a job. Just in the United States, more than fifty thousand start-ups produced a year.
If a start-up is not investable then they might as well close off their business before they have even begun. According to a research conducted amongst several experts, attorneys and investors, following are five primary elements the investors wish to find in start-ups to consider them investable:
Founders and Advisers
A founder and a panel of advisers are two aspects that are considered the backbone of a start-up because they identify the strength of the network the start-up bases on. An advisory council can help the start-up foot its growth and make relevant and significant decisions without compromising the scaling of the business. Advisers assist the founder in the financial component of the job and often enable them to form strong connections that allow the start-up to grow within the right and desired circle.
Before pitching your idea ensure you have answers to key questions such as how you intend to make money. Furthermore, identify if the answer caters to the notion that your business is in fact sustainable. Potential growth is one of the key factors that investors look for when making a call. When making a pitch, it is imperative that founders prove that their idea or their business can and will eventually make profit.
What Problem Is Being Solved?
Whether this is a local or a global problem or a mere market friction that is being catered to, it has to be spelt out for the investor because this can be a deal breaker or a deal maker. The market friction needs to be identified alongside expected and latent friction. All of which allow the founders to uncover the relevant market and understand their user persona so that their pain point can be catered to and whatever problem exists, it can be solved further allowing the start-up to make consistent money.
Each potential leave accompanies an arrival math dependent on a mix of the amount you contribute, the pre-cash valuation, the amount of the stock the financial specialist possesses, and the price itself. So it is significant not exclusively to have a thought of how much the organization may be sold for, however the investment you contribute and whether extra speculation rounds may weaken your proprietorship rate.
The very first thing one needs to do is identify which legal structure is fitting for the start-up. This depends largely on the type of business in order to identify the liability. One is required to decide whether a sole proprietorship works for the type of business or if a partner is required. Based on these details, the tax liability has to also be taken into further consideration. Whenever an investor considers investing a sum of money into a start-up or the founder, an intact legal structure plays a pivotal role in enabling them to decide in favor or against the investment.
There are several other aspects that go into the firm standing and the potential growth of an idea into the business world. It is imperative that the team of any start-up takes all of those into consideration; however, if you are at a time crunch then the above 5 points need to be given dire focus and importance to ensure what you are presenting to a panel of potential investors is worth your and their while.