Signs an Investor Is Offering You a Good Deal – Once you’ve pitched your idea to an investor, one of the first things he or she will want to do is crunch some numbers to figure out whether it’s worth investing in you.
This can be really scary and stressful, especially if this is your first time dealing with investors. But if you know what to look out for, you can tell whether the deal being offered is a good one or not, and what you should do next. Here are 10 signs that an investor is offering you a good deal.
10 Signs an Investor Is Offering You a Good Deal
1) The investor can help you with distribution
The investor can help you with distribution and do all the work of finding distributors. They often have connections to vendors, suppliers, and buyers that will save you time and money. Investors can also provide counsel on marketing strategies.
It is important to have a good relationship with your investors so they are not just seeing dollar signs when they look at your company but are invested in your success as well. To avoid conflicts of interest, don’t take investment from someone who competes with you.
If it seems like your investors are taking advantage of your business, this could be a red flag that they may have ulterior motives such as trying to buy out your company or forcing you into debt by taking loans out in your name without consulting you first.
2) The terms are fair and you are in control
If this is the case, it’s time to sign the paperwork. Investors will want to see evidence of your growth, too. Be sure to include this as part of your investor pitch deck. An investor will be more likely to invest in you if they know that you are on the path to success.
If you have any doubts about whether or not an offer is fair, don’t hesitate to speak with a financial advisor. He or she can help determine what’s best for you and your business.
3) Your product will be distributed alongside other established brands
Distribution is the key to any good business plan. If you’re not putting your product in front of potential customers, you won’t get the chance to prove that it’s worthwhile. When you are being courted by investors, look for signs that they understand this and can make sure your products will reach their intended audience.
They should mention plans to distribute your product alongside other established brands, or refer to other successful companies they have backed with successful distribution strategies. Make sure you have direct input into these decisions so that you know where your hard work is going!
4) You have access to new contacts within the industry
You can take advantage of their experience, and you’ll be able to tap into their networks. The investor will also provide you with expertise in marketing, sales, and customer service. A good investor will also help you find other investors that are interested in your company.
If they don’t offer this kind of help, it might be because they know it won’t work out for them or because they want to control the entire process.
5) There is no upfront cost for your products
Investors are looking to see if you have a product or service that has the potential to grow quickly. A good investor will know that it will take some time before they see any return on their investment, so they will want to invest in something with high potential and low risk.
If there is no upfront cost for your products, then this could be a sign that this investor is offering you a good deal.
6) The investor shows interest in your long-term success
When you meet with them, they ask about what you are trying to accomplish and how their investment will help. They care about the big picture and want to be involved in more than just the money side of things.
They want to know that you are working hard and following through on your promises. They want to make sure that if they invest in you, their money is being used for something worthwhile.
7) The investor has a proven track record of past investments in similar businesses
The investor has a proven track record of past investments in similar businesses, as well as a demonstrated understanding of your industry and your business model. They can show you where they’ve been wrong in the past and how they’ve learned from those mistakes to do better next time.
They are honest about what their expectations are for your company. And they have aligned incentives with you to make sure that their goals match yours: if the company does well, so do they, and vice versa.
8) The investor isn’t asking for any rights to your company or products
They’re willing to give you full control and ownership. They’re also not going after more than 10% of the company. This is by far the most important sign that they are a good investor.
Too many investors take way too much of the company, which is bad for you and them. Plus, if they don’t have any stake in your success, it’s unlikely they’ll help you out when things get tough.
9) The investor offers help throughout all stages of your business development
The investor offers help throughout all stages of your business development instead of just handing over money and leaving it up to you. If they are trying to establish themselves as the main decision maker, that’s not a good sign.
They want to know what you’re working on, and what your goals are and offer suggestions. In the end, their goal is for their investment in you to be successful.
10) They have the right connections and resources available to help you.
They invest in projects that interest them, but not just for the sake of investing.
They are genuinely excited about your project and want to be involved with it from day one.
They take a hands-on approach when investing, providing strategic guidance or advice on how best to move forward with your project . Investors will also provide you with valuable connections, introductions to partners and other important industry players, as well as access to their network of resources.
Conclusion: 10 Signs an Investor Is Offering You a Good Deal
Investors are more likely to offer you a good deal if they are interested in you as an individual. They will want to get to know your personality and be confident that you can keep up with the project. If they believe that the business has great potential, they may be willing to invest more money or give you more time. Your company’s valuation will also determine how much investors are willing to put into it. If your company is not worth much, investors may want to take on less risk for less reward and vice versa.