Business Law Breakdown: Funding Your Business Through Investors

A general rule of thumb for those planning to raise money through investors is that investors will only invest in businesses they understand. If you plan to pitch to investors, it’s important to keep in mind six things investors want to know before writing you a check.

First, the problem and your business’ solution. Explain the pervasiveness of the problem, why it needs to be solved, and how you plan to solve it.

Second, your unique advantage. Investors want to know the aspects of your solution that cannot be easily copied or purchased and how your solution differs from those that already exist in the marketplace.

Third, customer segments and the channels that you plan to use to reach them. Articulate the specifics of your target audience and why your solution will appeal to them. It is also important to identify the paths you will take to reach your target audience.

Fourth, revenue streams and cost structure. Provide investors with details on how you make money and know your fixed and variable costs. Be sure to identify ways to reduce those costs, if any.

Fifth, your team’s execution capabilities. Provide details about the expertise of your team members that makes them authorities in the market. If everyone on your team plays well together, highlight strong chemistry, because investors know that a strong team matters.

Sixth, provide investor relevance. Help investors understand why their particular involvement is so important to you and your business. If the investor can advise you and provide valuable insight, or if your business relates to the investor’s other projects or other investments, be sure to highlight that. If you have questions about funding through investors, reach out to our office.