Attractiveness of the Opportunity

To fully understand the opportunity at hand and test the reasonableness of target ROI, investors undertake extensive review of multiple internal and external business factors. Below we summarize six factors that a seller must adequately address to boost the success rate of any investor interaction. Against each factor, we have listed sampled actual investor requirements/preferences.
For a more detailed discussion of the 6 factors and other aspects considered by investors reach us on for a free consultation.

Factors Requirements/Preferences
The market
  • Clear definition of market – broad market vs. niche market
  • Current and expected market size in next 3 – 5 years
  • Large market where the incumbents earn high profit margins
  • Market resilient to dramatic shifts in business and disruptive technologies
  • Large and growing market with favourable demographic
  • Current and future market share estimates
  • Low buyer bargaining power and high switching costs
  • Potential for large market share with early penetration
  • Clear outlook on regulatory action
  • Wide pool of qualified staff
  • No large entrenched companies with superior distribution channels
The product
  • Revolutionary new product/technology
  • Superior production technology
  • Patents on product/production process
  • Well tested product with large market potential
  • Multiple use of product preferred or highly differentiated product
  • Market test on product pricing including pricing of competing products or substitutes
  • Ease of access to key production inputs
 The business model/strategy
  • Clearly articulated model, either based on cost efficiencies or differentiated premium product/service
  • Comparison between your model and competitor models
  • Scope to outsource non-core activities/processes
  • Concise marketing and sales plan tying back to overall company strategy
  • Estimates of capital reinvestments required to sustain business model
  • Good customer focus
  • Scalability of business model when it comes to taking advantage of new mega trends and innovations
 The competition
  • Early mover advantages from being pioneer of the product/concept and largest player
  • Market size big enough to accommodate several players with minimal market structure disruption
  • Dominant player in the market is accommodative of new entrants and doesn’t employ predatory strategies
  • No competitors
  • If market is crowded, scope to curve out and service sizeable market segments
  • Barriers to market entry
  • Attractive customer value proposition
  • Key partnerships with large clients in place
 The Management team
  • Experienced management team with good business track record
  • Key management team has long-term contracts with the company
  • Track record of optimal use of capital to execute strategies
  • Well regarded management team able to recruit and retain the best employees
  • A management team with strong entrepreneurial background
  • Company is not highly reliant on founder/CEO. Clear succession planning
  • A diverse well balanced aggressive team
  • Management has good reputation in the industry
  • Strong board in place therefore investor is not required to dedicate too much time to one portfolio company
 The Deal terms
  • Valuation is attractive and should give high returns if successful
  • Strong likelihood of high exit multiples
  • Staggered funding contingent on attainment of set milestones
  • Quality, experience and track record of other early investors
  • Possibility of early exit or acquisition