We’re often asked by businesses what investors look for when they are considering new prospects so we asked Northstar Ventures to shed some light. Here, Director Ian Richards explains what is on their checklist, and how FinanceCamp helps to introduce them to viable businesses.
As investors there are five key areas we look at when deciding to invest in a company. They apply regardless of the stage of business – whether it’s a start-up looking for seed funding, or a scale-up thinking about a larger funding round.
At Northstar Ventures the first thing we look for is a strong team. As capable as a founder or CEO might be, without the right people around them they are likely to struggle when faced with challenges. A strong team is made up of a balance of skills and experience – with everyone knowing and understanding their role. We want to understand each person’s experience and to see their enthusiasm and ambition to grow the company.
Large Market Potential
We want to know what the market is and the opportunity that you are trying to address. Is there a genuine market need? What is the ‘problem’ that you are providing a solution for, and who are your competitors?
FinanceCamp helps entrepreneurs understand and succinctly present their market analysis, which helps investors understand the opportunity a business offers.
Even global businesses began life as a start-up. Investors are looking for ventures that have the potential to scale up and become industry leaders. We’re interested in what your product is and what route to market you’ve identified – is it realistic and achievable? We’re also interested in the way you’ll manage your manufacturing processes, your people, your technology and anything else that might have to adapt as you grow.
Protectable Market Position
As an investor we need to know that if we invest in your company, we’re investing in something unique. We look at legally protected intellectual property (IP), stand out branding and existing contracts or customer bases – anything that makes puts your company ahead of the competition and keeps it there.
The FinanceCamp programme introduces entrepreneurs to a range of experts, including IP and legal advisers, which can help strengthen a company’s position.
Route to Exit
The final thing we want to know is what exit you’re seeking for your company. This could mean targeting an acquisition by a bigger firm or scaling the business and buying out your shareholders. Whatever route to exit you have planned, investors want to understand how likely it is (e.g. is there a precedent in your industry for acquisitions) and what timeframe you are working towards.
Whatever stage of business you’re at, it’s always worth speaking to potential investors as early as possible. We’d encourage any entrepreneur looking to raise investment to get in touch, and to sign up to FinanceCamp to find out more about your options.
FinanceCamp is a one-event and supporting workshops designed to make it easier and speedier for businesses to get hold of the money they need to grow. It brings together businesses with bright ideas with lenders who want to lend and investors who want to invest. FinanceCamp helps you to explore the different sources of funding available to you, weigh up what fits you best, prepare your business for investment and meet the people who can make it happen.
Next gathering: Wednesday 24 May at Ramside Hall, Durham. Apply for your free place here
About Northstar Ventures
Northstar Ventures is the North East’s leading early stage venture capital investor.