Startups looking for investment capital need to do their homework first according to Moreton Ventures CEO Simon Horne.
The first thing investors look for in startups is whether they have validated the market and whether they have any sales traction, as it’s important to have early traction.
The fitness of a founder is another element given consideration by investors. They look at things like a founder’s temperament, whether they can execute their business plans and do they have the confidence to grow their business.
Mr Horne said investors were always considering whether a business would deliver a reasonable return on investment.
“What market opportunities are out there for them? How big are they going to go on a global scale?” he questioned.
Before looking for investors it is vital for startups to first establish a solid customer base which loves and embraces their products. You’ve got to grow the business a bit first.
Attracting investment is also about getting your pitch right.
Founders need to let potential investors know what problem they’re solving. Basically, why they exist. Let them know how big your company is and what you are doing different from your competitors.
A pitch should outline where the business is heading, inform who your customers are and what your marketing strategy is. Show how far you’ve come on your roadmap and the team you’ve got behind you.
Mr Horne said it was impossible for investors to always pick winning businesses.
He said once he was going to invest in a business which was going fantastically but after networking with other investors realised the numbers didn’t quite stack up.
“I was going to spend $150,000 on the business and less than six months later they collapsed.”
Mr Horne said similarly sometimes quiet achievers turned out to be wonderful investments.
“Sometimes investors are lukewarm about ideas, but other investors are excited by them and this enthusiasm ends up being well placed and the business goes on to be a worthwhile investment.”
INNOV8 Logan founding member Brad Apps and Venture Capitalist Simon Horne are establishing an angel investment group in the City of Logan, giving our local startups and entrepreneurs an avenue to secure the funds they need to scale their venture.
The Logan Angels Group will be the tenth angel investment group to be established in Queensland.
Angel investors are individuals who provide capital for business startups, usually in exchange for convertible debt or ownership equity.
“Our angel investors will offer seed funding of up to about $250,000 and will generally take about 15% to 20% of a company’s equity,” Mr Horne said.
“One of the angel investors also sits on your company’s board.”
“There are some great ideas out there and we probably invest in about 25 new ideas every year.”
Those interested in learning more about becoming an angel investor or would like some free advice and feedback on your startup idea can contact Brad Apps from Logan Startup Hub by emailing firstname.lastname@example.org