GrowthFunders has detailed exactly what investors want to know about your company before they opt in to contribute money to your cause.
The crowdfunding site says whether you’re appealing for equity contributions, want a bank to fund your great idea or are interested in rewards-based crowdfunding, there are ten metrics potential funders want to know about you, your company and your product.
Author of the article, Jenna Taylor said: “Raising capital requires structure, preparation, and supporting documentation. That documentation usually includes a business plan, executive summary, and financials.
“Each is used to give potential investors an insight into your company, in terms of past performance, present standings, and future plans. Whilst every investor has their own set of criteria when it comes to what they look for when making an investment decision, there are some key metrics which usually attract careful consideration.”
She says you should be prepared to reveal some sensitive information about your company including salaries, revenue per employee and your marketing spend, which could put off some organisations from appealing for funding. However, investors need to know whether their investment is safe with you and you’re not haemorrhaging their contribution.
They will also want to know the gross margin of each of your products or services so they can judge how much they’re likely to get back from their investment. Revenue growth should be easily accessible, allowing investors to see how much you expect the company to grow, in addition to net income and contribution margin – the profitability of each product you’re selling.
Other factors that should be revealed in your pitch are customer acquisition costs – how much you’re spending to get each customer and the revenue potential of each of your customers, known as churn rate. Set this too high and you will struggle to make money.
You can read more about each of these factors on GrowthFunders.
