Welcome to the wonderful world of capital gain from capital gain, a complicated world but hopefully made simple with this post. The objective of this post is to strengthen company appeal for those of you who are looking to catch a VC’s or Angel Investor’s attention.

Appealing to an investor is pretty much the same as requesting a loan from a bank, you need a spot-on presentation, a great idea, and the right attitude to even have a shot at all. Investors need to know what your company is about at a glance, they need to see that you are fully confident about your business and where it is heading, and furthermore, they have to be compelled to act upon investing their time and money in you and/or your company. Lets face it, even if you catch an investor’s eye it doesn’t necessarily mean that they are willing to cough up the cash that you need right away. You must understand that they are constantly evaluating their investment options, new and old, trying to find a business that gives them that gut feeling they’re looking for to finally jump in and invest.

Venture Capitalists vs. Angel Investors
As you may or may not know, an Angel Investor is often best for small start-up companies that are in need of a little boost to get the ball rolling (although Angel Investors will on occasion invest with established businesses too). Typically an Angel Investor is willing to invest anywhere from $200,000 to $500,000 of their own hard earned cash, and since it is their own money, it makes them very cautious on who and what they invest in, which also makes them somewhat lenient on negotiating returns.

Now Venture Capitalists on the other hand are somewhat different since they usually play with institutional funds, meaning they invest with other people’s money. So when dealing with a Venture Capitalist you can usually expect them to cough up the big money, like that $1+ Million dollars you’ve been searching for in investment money.

They both have their advantages and disadvantages, so make sure you know which one you’re interested in dealing with, since each of them will require different tactics and they overall have their own ways of working. Initiating and striking up business negotiations various on which type of investor you choose, so get your priorities start before you start diving in looking for investors.

Here are several key pointers to focus on to strengthen the appeal of your company towards investors.

1. Familiarity, An investor is ideally attracted to businesses they understand and are familiar with, that is why they usually stick to a certain industry. It’s what they know and what they feel most comfortable in that really matters. Targeting an investor within your specific industry will always be easier than trying to hook an investor from another. If for some reason you’re set on finding an investor outside of your industry, then you will have a harder time and will have to pitch them quite a clear and extremely compelling argument to be able to win them over, and actually make them commit to an investment. It’s difficult enough to do this within your own industry so make sure you are fully prepared and strong headed either way. Again, you will always find it easier to pitch a presentation at some one that knows about your industry then some one that only knows about “tomatoes”, so keep focused and make sure to target several investors that are already set on investing within your specific industry.

2. Innovation, Investors are always looking for “gems” within their industry, by “gems” I’m referring to new and innovative companies on the cutting edge, businesses that stand out from the rest. In a way, investors are looking for the next Flickr, YouTube, or MySpace ( although not another clone of these sites ). These are just some examples of businesses that had the potential of growth without anyone knowing it and actually grew out of proportion. Investors are searching for businesses that fulfill a need which no one else is doing (or doing successfully), businesses that are first to break ground. Investors are constantly on the look out for these industry “gems” and more so now that we’ve seen the big payout they are able to produce for the lucky owners of these businesses. Now I’m not saying that it doesn’t pay to have somewhat the same concept of a prior established company (just look at what Facebook has accomplished after Myspace), but at the very least make it better and more innovative. Provide more, make it usable, cater to individual needs, create a potential of overthrowing the competition, and finally stand out from the rest. “Thinking outside the box” is a statement that is overly used but is really never thought upon, it is always easier said than done, so actually apply your experience to your work.

3. Management, You must show investors that your management skills are superb and trustworthy, this will allow them to feel that they are in good hands. Remember that their money is riding on your success, and the last thing they want is for you to screw it up for both of you due to bad management. Always keep organized and have everything in check, even if you know that there are some flaws within your company. As long as you know the flaws then you are able to apply good management to fix the issues. Keep in mind that good management is more then just delegating, it is understanding, it is knowing how to keep calm, it is having back up plans, it is recording progress, it is learning from failures, and much more. Keeping up with good management should be one of your main priorities to add greater appeal to your company by making investors feel comfortable in trusting you.

4. Confidence, When dealing within the business world the only way you will succeed is by showing that you are confident. Whether it be an idea, a company, a product, and/or a service. Confidence will lead you into success and assist you through the rough patches, you could say it’s like faith just with facts applied. If you show weakness within the business world it will only hinder you and may result in all sorts of unfavorable situations. Therefore you must project unto others that you are empowered and know that you will be successful, “you know your stuff” so show them that you do and be consistent about it. Remember, confidence and being an ass are two completely different things, so make sure not to confuse one with the other.

5. Value, Investors have to feel that they can bring much added value into your company. Show them that you have everything else covered and don’t need help other than financial assistance which only they can provide. But with that financial assistance, make it clear to them that it will broaden your company’s horizon and really make a difference. They want to know that their money will be put into good use and make an extremely positive impact on the growth and success of your company. Don’t ever lead them into thinking that it will only sustain you until success somehow falls from the sky, if this is the case then you need to request a larger investment and it also insinuates that you haven’t thought out and planed on why you need financial assistance in the first place.

6. Commitment, Show investors that you are fully committed to your business, although the underlining goal you may have set for yourself is to flip the business (basically cash out), it is always better to plan for the long haul. This, much like having ‘good management’ which I spoke about above, will allow investors to be at ease and be willing to trust you just by simply presenting the fact that you are committed. Let’s face it, who would want to invest in someone that has A.D.D (Attention Deficit Disorder) when so much is at stake? The answer is no one, due to the sole fact that as an investor we all want to be successful and want everything to be taken care of without our involvement. So be committed to your business and let it be known to potential investors that you are in it for the long run, this will definitely increase your appeal.

7. Financial Expectations Be clear in what an investor can expect from participating and investing in your business. Investors don’t favor deals that require huge sums of money or additional rounds of investment money, but if you are direct about it then they will be more lenient and nonetheless may very well invest in your company. Always be straightforward about the finances, money is not something to take lightly. Negotiating investment deals will always go smoother and much faster when both parties are open and willing to be direct. From the start, know how much finance you truly need and why you need it, also how much you are willing to offer in return. This will get the meeting started on the right foot, because instead of “beating around the bush”, you are actually being clear about what you need from them and what they can expect from the get go.

8. Presentation A spot-on presentation is the key to being successful, I’ve said this in the past and still believe it to be a solid fact due to experience. You must present yourself and your business attractively, presentation is everything (apart from obviously having a great product/service). Find yourself the best presentation/design consultant in the industry and have them work out every single aspect of your company into an almost seductive style. From your website and products, to meeting presentations and even office layouts, everything needs a presentation upgrade to increase appeal. This will not only increase appeal towards investors but also increase appeal in general, your company image is quite important and needs to be represented correctly, and attractively.

Keep in mind that there are other factors that play a role in actually acquiring capital from an investor, but hopefully these key pointers will assist you and start you off on the right foot in raising an investors eyebrow.