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Identifying Your Competition and 4 Other Things Investors Need to Know Before Investing In Your Business

Getting funding for your business is highly competitive, so it is crucial to be prepared to answer questions your potential investor may have. There are thousands of visionary entrepreneurs seeking investors’ money just like you.

Photo by Anna Shvets from Pexels

Black founders already face a significant hurdle in attracting funding. While funding still drastically lags compared to non-Black startups, in 2020, Black founders saw an increase in investor funding. Black founders raised $400 million in the first six months of 2020, according to Crunchbase. And in 2021, Black founders outpaced full-year funding totals for both 2020 and 2019, when they raised $1 billion and $1.4 billion, respectively, Inc. reported.

Before reaching out to investors for funding, be prepared for the questions they may ask. Here are five things investors want to know before giving you their money.

1) Why will anyone pay for your product/service? You’re convinced your idea will be a brilliant and viable business venture, but you will have to convince the investor why consumers need what you have to offer.

The investor wants to know what is your value proposition. “A value proposition refers to the value a company promises to deliver to customers should they choose to buy their product,” according to Investopedia.

2) How well does your service/product work? Compared to similar products already on the market, how does yours better solve a problem or fill a consumer need? Investors are looking for innovation.

3) Who is your competition? Saying there is “no competition” is not an option. There is always competition, whether direct or indirect competition. Indirect competition is products or services that offer substitutes and alternatives.

You must illustrate to investors how you’re different from others and how this gives you a better chance of surviving the competition.

Read full story at Finurah here.

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