Essentials of an Investor?

In today’s Start-Up Ecosystem, a viable idea alone does not ensure the success of a new venture. The idea, howsoever bright it might be, most importantly needs funds for sustenance. The entrepreneur might take loans from his family and well-wishers or even mortgage his property but for how long? At some point in time he/she will require funds that is beyond his/her capacity. The requirement of funds may be required during R&D, or later during production, or even later say, during marketing and launching the product or service. Later on he/she might require funds to employ the right skilled people for the right job, for better plant and machinery, and much later for new product launch, expansion and probably acquisitions.

For the above, he/she needs anew and a strong source of funding and therefore in comes the investors. So, who are the Investors?

Simply put an investor is a person or an entity who invests in a business with the aim to achieve high returns at lower risks. Investors do not speculate on their investments.


Investors may be bracketed as –

  • HNI Investors – High Net Worth Individuals are persons who possess investable surplus in liquid form.

  • Private Equity Investors –  Private Equity is the investment of equity capital in private companies whose shares are not traded. PE firms invest the money they have collected from their investors and on their behalf. PE funds generally are accumulated through Pension funds, Insurance Funds etc. and are managed by professionals, who are paid management fees.

  • Banks and Financial Institutions – They provide loans to entrepreneurs for over a period of time at a pre-decided rate of interest

  • Govt. Funds – Govt. departments also provide Grants and Loans (at a minimal rt. of interest) to start-ups, who have viable ideas, robust business plans and execution capabilities. For eg. BIRAC, NIDHI, iDEX etc.

So now that that the need on an investor and their types have been understood, it is also important to note that the entrepreneur should also know a few quality markers of an investor.

  • Decisive

  • They are driven to create

  • People’s Man

  • Cautious and methodical.

The entrepreneur now has to provide a Pitch Deck to the Investor. The pitch deck is a collection of slides about the start-ups overview and consists of the business plan, competitor analysis, products or services, goals and strategies and details of the management team. It is a must for the investor to understand the “Offer”, better.

Once the venture has funds, the right spends may be made or even acquired and that sets the ball rolling for the venture. In return to the funding, the entrepreneur has to part with a pre-decided stake. The new investor is now part of his venture.

So after all the discussions the question that now needs to be answered is, does the investor bring in only money and nothing else? What other support will the entrepreneur expect from the investor, to carry forward the venture

  1. The Investor will support the Entrepreneur by sharing his business network with him.

  2. As the aims of the Entrepreneur and the Investor are the same, i.e. to grow and earn more profits, they will complement each other.

  3. The Investor will use his network to generate more funds as and when required.

  4. The Investor with his personal experience may also mentor the Entrepreneur and provide him/her positive guidance.

  5. A seasoned Investor, who knows the market and the future prospects of the venture, will surely build stakeholder’s confidence

  6. Although the Investor is part of the venture, he is not expected to put unrealistic pressures on the Entrepreneur.

Thus, the Investor being an outsider, now becomes an integral part of the venture infusing it with finance, ideas and camaraderie. The venture is now set to go and reach for the stars.

Essentials of an Investor?

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