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How to make your business attractive to outside investors print Print

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Are you looking to take your business to the next level, or to develop a great new idea? Getting investors on board can be a good way to secure the funds you need to achieve this. Here are 10 tips to make your business more attractive to investors.


Attract investors

What investors are looking for

Do your due diligence on any investors you’re planning to approach. They’ll appreciate that you’ve done your homework on them and become familiar with the industries they’re involved with or interested in. If possible, see if you can get someone they trust to introduce you.

There are some key factors that investors will take into account when they’re deciding if your business is worth their time and money. You can whet their appetite with these 10 tips:

  1. If you’ve got any debt problems, get them sorted out. Investors like to know their money is being put to work to increase profits, not pay off debt.
  2. Do whatever you can to reduce your fixed costs. Investors will like seeing that you run an efficient business that can operate on a lean budget.
  3. A strong, professional business case is essential. So you need to be well prepared with a clear business and strategic plan.
  4. Be realistic and knowledgeable about current and potential competition. Investors will be impressed that you’re up-to-date with who else is in the market.
  5. Establish a good rapport with them. After all, you’re going to be in business together, so it’s important to get along with each other. Make sure they know you’ve got an open mind when it comes to their advice – a good investor will have lots to offer in the way of experience and contacts.
  6. Make your pitch as clear as possible, and in just a few minutes. Investors want to know that you can explain your business succinctly, but briefly. It’s worth practising the 'elevator technique' – imagining that you have to pitch your business to someone during a 3-minute lift ride. You want to explain quickly and clearly how your business model can make lots of money.
  7. Keep the focus on benefits and financials. You don’t need to spend time talking about technology. If they want to know more about the technology behind your products or services, they’ll ask. 
  8. Keep your sales predictions realistic. It’s much better to focus on your track record and things like contracts or locked-in revenues, than on wishful thinking.
  9. Show investors they’ll have some control over how their money is used by agreeing to funding instalments that are based on achieving goals.
  10. Make sure you have a clear exit strategy. Venture capitalists in particular make most of their profit when they exit a business, so your pitch should include this. The most common exits are:
    • A corporate buy-out. This is where a large corporation likes your business and thinks it will fit in well with theirs.
    • A management buy-out. You and key staff buy out the investors.
    • A management buy-in. Another syndicate buys into the business and manages it.
    • An Initial Public Offering (IPO). This is where you list your company on a stock exchange, so that investors can sell their shares.

Next steps

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