Thinking Like An Investor
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Thinking Like an Investor
Summary:
Many entrepreneurs mistakenly view investors merely as money rather than as people, which can be a critical misstep. Understanding the personal aspects of private investing can significantly impact fundraising success.
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Private investing is vastly different from picking a stock on NASDAQ. It's a personal endeavor, with investors having their own goals, preferences, fears, and challenges?"just like entrepreneurs. They experience worry and stress when things go wrong. Thus, building a strong relationship with investors is crucial to securing funding.
Understanding Investor Types
Investors can generally be categorized into two types: Subjective and Objective.
Subjective Investors
Subjective investors have an emotional connection to the entrepreneur or the business. They may know the entrepreneur personally or through a mutual connection, which gives them confidence in the entrepreneur's capabilities. They might also resonate with the product and wish they'd come up with it themselves. These investors often engage early, during rounds like "friends and family." Because of their emotional ties, they tend to overlook gaps in the business plan or model, seeking reasons to justify their desire to invest.
Objective Investors
Objective investors focus purely on the business side of investing. They typically evaluate multiple projects and aim to narrow down their choices. They seek any red flag as a reason not to invest. Common deal-breakers include business plans that are unclear or hard to grasp, unrealistic or vague financial projections, and inadequate execution plans for using the funds. Objective investors want their money to strategically drive growth and revenue, backed by detailed plans and measurable milestones.
Making the Connection
Ultimately, even for an Objective investor, writing a check involves an emotional leap. To reach the point where an investor decides to back your venture, your business plan and model must be flawless. Establishing a solid relationship with potential investors by demonstrating reliability and understanding their concerns can make all the difference.
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Keywords: angel investors, capital raise, business plan, funding
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