Guidelines for Investors

An investor is a person who allocates a capital with an expectation of financial return. Some risk

is involved in every type of investment but there is more risk for an investor who fails to make

investment decision. Therefore, an investor should consider several issues before making the

investment decision. Some of the several issues that an investor should consider are as follows:

Target market/ Customers/ Revenue Drivers: Good financial return is the ultimate aim of

investment. For this purpose every investor should know who are the revenue generators or the

customers. The customer’s behavior is not always static. So, investors should know the trend of

the customers in the desired investment. Investors should look whether the business address

growing market opportunity, customers segment and the competitive position in the target

market.

Product/ service: Investors expect whether the product or service offered by the venture address

the value proposition. The product or service offered by the business should adequately address

the needs of the customers without creating new problems. The investors look for the sustainable

market potential of the product or service offered to make their investment worthwhile.

Financial returns/ROI: Investors expect to see return on their investment. Before investing

every investors should consider the realistic financial projection and they should look for the

forecast of the financial result that the venture will generate. Furthermore, investors seek higher

return in the riskier market.

Vendors and suppliers: Investors should understand the entire value chain in order to determine

whether their investment is at risk. The profit margin of business is directly affected by the

power of the suppliers. Greater the power of the supplier lower will be the profit margin.

Management team: Efficient management team and the entrepreneur with unique insight

increase the chance of success of an entrepreneurial venture. Investor expects management team

with some people who are the leaders in that field and those who understand technology and

segment of market well.

Competitive positioning: Investors look for unique and protected business model, patented

technology which provides the sustainable advantage for the business.

Government policies and laws: Investors often look for the government policies related to their

desired investment ventures. Provisions of taxation, product guidelines and stringent regulation

have significant impact to the business. Therefore, investors need to be aware of government

requirements and impact on the investment.

Business plan: Investors look for business plan with sustainable marketing and financial

projections before becoming the part of investment venture.