14 Dec

What Investors Should be Looking for Prior Investment in a Startup?

You have kept aside funds for investing in the next best innovational product / service. You have been hearing to a lot of ideas presented by different people. The idea seems nice but you are still unwilling for investment. The truth is, you should be unwilling. If the pitch cannot define the real goals of the startup, how it will start, work and proceed, it will be worthless and you should move to a different idea.

Nevertheless, to cope up with these issues, there are some strong signals that you should watch out before deciding which new business to invest on.

A Good Idea Is Not Always a Profitable Idea 

You can’t simply choose an idea if it hits you in the first place. You need to evaluate it fully. Evaluate it by understanding it inside out. Checkup if the business idea can be executed. Checkup with the business’s competitors. Think about operating costs and risks associated with it.

What’s the Exit Strategy? 

The most important thing to consider while you invest is the exit strategy, means how will you get your money back. Not just this, you need to know how long will it take to get the money back. The worries don’t just stop here. You need to be sure if any emergency arises, will you be able to get your investment back. Perhaps a 30 or 90-day guarantee will work. Make sure that you are clear with these questions prior giving funds.

Expansion and Growth

Expansion really matters. You don’t want yourself to be stuck after a certain point, thus you need to be sure that your product is expandable. Furthermore, you need to be convinced that your product / service reaps profit in a long term and is not short-lived. Even if the pitched idea has no plans for direct expansion, the ROI should be your ultimate objective. 

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