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Unveiling Investor's Mind On Investment Decision Making
Getting into your investor’s mind is one of the first things in the mind of people who are planning to gain an investment. So there are a few things you have to keep in mind which would help you to master this skill like a pro. For understanding what makes your proposal for investment strong, you need to highlight key points which would trigger the investor’s attention to the proposal.
Return On Investment (ROI)
The majority of things are a numbers game when it comes to business. So, you must keep in mind the skill to portray your business in quantitative terms when you talk of business; and when you are talking, make sure you talk in the language of returns. It could be illustrated with the simple example that a particular business model would bring in a certain level of return on the investment made (for example 2x or 3x ROI). Including such statistics would give a real-time picture to the investors, which would help in engaging them more in the conversation.
Hurdles / Challenges
The first thought that an investor encounters while listening to a business model is the hurdles/ challenges that would come while execution. These hurdles can differ widely in any department ranging from operations, sales, logistics, and others. So, adding a slide in your pitch presentation about the hurdles or business challenges can be a bonus; as it would make it clear that you understand the business model in and out, and that you are prepared to resolve all the issues faced in the same.
Future Scope of Business
Forecasting with the numbers is the most comparative way of understanding things and furthermore analyse the business potential. Providing a business forecast makes it easier for the investor to make an understanding of the business in the coming years or the decade.
Vision and Value Addition
When you are working in a particular domain, you have a clear understanding of the domain and vision for the business. So, you need to make sure that you are able to align your perspective with your investors’ vision, and thus nourish it with hardwork and an innovative approach. Your business idea must solve a problem and add value to the market, which enhances its probability exponentially, of making an impact on the investor.
Loss Aversion
Loss aversion is a cognitive bias that explains the fact that losses have a greater impact on our minds than gains do. In simple words, a person would prefer not to lose $10, than to gain $10. On the similar lines, investors can avoid investing at all or make decisions that minimize risk, which can result in foregoing financial gains. However, if you are able to align the market forecasts and business vision in the right direction, it can lead to a win-win situation for both parties.
Keep these things in mind when you are planning to attend the investor meeting as it would make your meeting impactful with better chances at results