Regardless of Debt or Equity, Investors Are Aligned on What Qualities Make a Good Investment

color headsHaving an idea and the intention to build a successful startup is easy. Bringing the idea to life and successfully executing, however, can be a rather treacherous road. Although debt providers like River SaaS Capital and equity investors differ in their capital offerings, they do align when it comes to their quest for identifying and supporting businesses poised for growth. The trick for growing businesses is to find a capital partner whose goals best align with those of your company.

While startups need to take in their fair share of considerations when pitching to an investor, investors also need to consider a wide range of variables before committing to an investment. From the multitude of facets and risks that a startup brings to the table, any type of investor is most likely to consider common aspects.

The Founders

Investors want to be able to form a connection with those they are investing in. Whether common ground is formed based on areas of expertise or goals and ambitions, investors want to know that they will add value to the company.

It’s also important for investors to see that the founders have a clear vision of how their product is unique to the market. Founders who have the conviction and ambition to differentiate themselves from their competitors – and the experience and expertise to do it ­­­­­­­­­­– are standouts to investors.

The Management Team

Investors learn a lot about a company by getting to know the management team. Cultivating a relationship with the founders and executives brings comfort that there is a parallel mindset and culture driving the business forward. Without conviction in management, investors will think twice before putting money into the business.

As a founder or CEO, surrounding yourself with people who are aligned and possess strong, complimentary skill sets are key to solidifying an investor’s faith in your business.

Market size, opportunity and predictability

It is important to show investors that you know the market potential of your offering and how it’s differentiated in the market. Investors also want to know if you know your product’s sustainability in the market.

For example, one of the reasons investors are drawn to SaaS companies is because of an increase in customer demand over the last few years. More and more companies are relying on SaaS products to host in-cloud applications and infrastructures, and the demand is increasing making SaaS businesses more desirable to investors.

The offering’s ability to create revenue

Investors will want to invest in your company because they see growth potential and they want to get a return on the capital they deploy, whether that is a loan being paid back or in the case of venture investors, a successful liquidity event down the road. The goal of an investor is to give the product an edge to reach the next level of success, whatever that may be.

Showing SaaS investors that your company is generating some form of recurring revenue, can retain customers, while increasing bookings reassures investors there is potential for great success in the future.

Being able to articulate your value proposition and demonstrate that it’s backed by a skilled management team, large market potential and recurring revenue can put you in a better position to get an investor’s attention. While the stakes are always high for companies looking for extra capital, having a strong, experienced team and a successful, unique offering show that you’re prepared for the challenge.

If you would like to start your journey towards being investable, contact us at River SaaS Capital. We offer tailored solutions for the unique capital needs of growth stage SaaS companies. Visit our funding page to learn more about how River SaaS Capital provides financing solutions for SaaS entrepreneurs, or fill out our short online application to get a conversation started.

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