According to a report by Clarify Capital, investors are most likely to seek businesses that are profitable, with high potential ROI and strong leadership. Nearly two-thirds of investors believe that now is a good time to invest, despite economic concerns. The report found that investors are most interested in funding technology, AI, and medical/health care in 2023, while over half plan to avoid cryptocurrency investments.
Knowing their numbers and competition as well as being in a growing industry can make businesses attractive to investors. Earlier funding stages are particularly attractive to investors, with funds typically going towards manufacturing and production, sales, and marketing. Investors recommended that business owners know their numbers and competition, but also demonstrate potential for growth, back up the business with sound financials and analytics, and be open to pivoting business models or product offerings as needed.
Apart from a business owner’s personality and business model, investors also notice clear-cut green and red flags when assessing a potential investment. The top considerations for investors are whether the company is profitable and what the possible ROI is. The next most important green flag was strong business leadership. The report also highlighted that a pitch that seemed too good to be true and vague business plans are major red flags.
According to the survey, 71% of investors expressed interest in investing in either technology (41%) or artificial intelligence (30%). This increased interest in AI could be attributed to the growing popularity of OpenAI’s text-based AI platform, ChatGPT, and generative AI.
Additionally, the study found that investors are primarily drawn to businesses that offer profitability (44%), high potential return on investment (44%), and strong leadership (28%). However, they also perceive pitches that appear “too good to be true” as a major warning sign.
Cryptocurrency, on the other hand, was far less appealing to investors, with 52% indicating their plan to avoid digital investments in 2023.
In conclusion, the report by Clarify Capital provides valuable insights for businesses seeking to attract capital from investors. By knowing their numbers and competition, demonstrating potential for growth, and having strong business leadership, businesses can make themselves more attractive to investors. Understanding what investors are looking for in terms of green and red flags can also help businesses avoid common pitfalls. The report also highlights the industries investors are most and least interested in funding in 2023, which could be helpful for businesses seeking funding in those areas.
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