By : praval

Investors and their investment is the key behind the successful initiation of a startup. It is such a well known fact; unless there is Vitamin ‘M’ (M as in Money) a startup is difficult be setup. Major investments come into a startup either from an Angel investor or a Venture Capitalist and we all know that convincing a person to invest in one's own bran child is one of the most difficult things to achieve. Investors are the only catalysts without whose help the successful transformation of an idea into a business seems extremely tough.

The important parameters which an investor looks into an idea before investing in it are;

• A near perfect business model - The viability of a concept and the confidence of the business model succeeding is the most important parameter to be considered by the investor.
• Market Segmentation - The target market should always be the mass market because the chances of the product failing is high when the target market is a niche market. It is good to be an optimist, but one should always be prepared for the worst case scenario.
• Product Innovation - Investors should keenly observe the technologically proficient quotient in the product offerings. An important consideration is that the startup should not offer products to the market which is ahead of its time, involves complexity and is weak when user friendliness is considered.
• Team work - A startup can only be as successful as the team. Thus, teamwork is the core competency that a startup should always possess.
• Return on Investment - To increase the profit, it is essential to minimize the capital invested, but compromises should not be made on the quality of the input factors.
• Value proposition- Investors should try and examine a long term vision which can be transformed from implemented value to a much higher level. The uniqueness of the product to be offered has to be kept intact and closely monitored.
• Experience - Prior experience is again one of the most important parameters for an investor to invest in a startup. Experience has no substitute and it is always better for an investor to have a tie-up with an individual who has a familiarity in the same setup as compared to a newbie.
• Distribution Channels - Efficient distribution channels act as a major cost reducing tool and thus are always on the top priority of an investor. It also helps in creating a positive vibe about the product that results in word of mouth marketing.

Great products are hard to build, great investors are even harder to find. But once an investor invests, it is important to make him realize time and again that then investment will bring out profits in the future.