This is one of the main obsessions of many entrepreneurs. How to convince a first investor and have adequate capital so that the business in question grows at a good pace? After talking to many entrepreneurs, investors, venture capital funds, and accelerators there are some common points to keep in mind. Here are a few keys to convincing your investor to buy stock or mutual funds:
Consistency with investment history:
The vast majority of investors have a predilection for some startup or entrepreneurial themes.
Sometimes a “venture capital” does not invest in travel, or an investor is specialized in eCommerce.
Collecting information before this type will avoid unproductive visits for your objectives focused on attracting investment.
Investors want to see that you are 100% for this project, no half measures.
It is not very logical to think that you are still trying to see how the business works and ask someone to invest money. This rarely works.
Make sure you can show that there are no personal doubts in your statements.
A scalable business is one that does not need to double its resources to obtain double the benefits.
Once the investment is made in the basic structure of the business itself, your income can rise exponentially.
The investor needs to see scalability because it is an essential element to obtain a good return.
What might convince an investor to buy stock or mutual funds?
Heterogeneous and motivated team to give a clear example:
Have you ever seen a football team where everyone wants to play as a forward and score goals? Well, this is not very different.
You need to cover most of the important areas: technical, product, marketing, and financial.
When you can present a team with complementary skills and are oriented to the same cause, you will have a lot to win.
This is the point where most entrepreneurs fail. It is mainly based on being able to demonstrate numerically the good performance of the business.
If you cannot teach validated figures, even if they are a market test, it will be difficult for you to convince an investor.
Everything else you will see as subjective arguments.
And behind this, logical doubts will enter: the market is not large enough, customers do not respond, and etc.
Being able to “protect” your investment:
Here the following terminology comes into play: (these are just some)
– Pre-money valuation: Valuation of the company before investing.
– Preferential dividend: In case of obtaining benefits, the first to collect is the investor (as long as it is clearly signed).
– Liquidation preference: In the event of a sale, the initial investment is first settled, then it is divided into parts according to the agreed%.
– Preferential acquisition: In the event that a partner sells shares, the investor has a trial-and-error option.
As you can see, there are certain aspects in which the investor and the entrepreneur have different paths.
Many entrepreneurs at first give up too much because they need the money and are conditioned and tied up in the not-so-distant future.
In the end, the entrepreneur who is capable of having a good idea must make decisions. What is better? A good idea without investment or a good idea with the investment?
Without a doubt the second option is the good one, so we will do everything possible to achieve it.
The objective is to grow a business idea as quickly as possible and with the maximum guarantees of success.
Having the resources will be essential to create an effective strategy and achieve what we propose.
What might convince an investor to buy stock?
Sticking to the merely technical aspects of a project does not contribute anything to the investor.
But knowing the history that has led you to stand in front of him to ask for his investment, yes.
Telling a story will bring you closer to your investors.
In addition to providing them with information about your professional career, and why you want to develop the project.
Is it better to buy mutual funds or stocks?
Knowing what is the difference between investing in a mutual fund and investing directly in stocks? It allows you to know what they are and to invest knowing that you are perfectly familiar with the different aspects of each one. And not make mistakes in your investment.
What are mutual funds?
Mutual funds are the set of investments (having a diversified portfolio) made up of stocks, debt instruments, or fixed income instruments. or combined stocks and fixed income. Mutual funds typically invest in stocks and bonds of companies.
What are stocks?
Action is when the share capital of a corporation is divided equally.
Said parts are offered in the Stock Exchange so that investors.
When buying shares become shareholders, becoming owners of the company in proportion based on the number of shares they own.
When buying shares of a company, publicly. The shares for their performance on the stock market, are listed to generate money.
In addition to obtaining money if the company generates profits, it will be distributed to shareholders through “dividends”.
In conclusion and in response to the question, how do you see the difference between stocks and mutual funds? It is notorious that it is not the same to invest in one or the other.
Investing in a stock or bond is doing it separately. And investing in a mutual fund is being able to invest in stocks and bonds at the same time.
It is like having an investment portfolio in which they invest in stocks and bonds.
What is the main advantage of a mutual fund for an investor?
We can say that the advantages of investing in a mutual fund are summarized in the following:
Through the redemption of the mutual fund shares, the investor can almost immediately access their money.
Or a part of it without having to worry about selling the part of the investment.
The fund managers use their experience, knowledge, and the economic-financial information available to design the portfolio of each mutual fund.
Mutual funds diversify their investments.
That is, they invest in different capital market instruments, combining debt, capitalization, and other assets from different issuers.
There is a wide range of mutual funds in the market. That allows there to be more than one investment alternative for each of the different types of investors.