These are some of the keys to becoming an investable business and unlocking the financial backing needed to fuel your growth and achieve your goals.

In today’s business landscape, startups have been gaining ground and capturing the attention of investors for years. However, not all of them manage to become investable companies that attract the funding necessary for their growth and success in the short, medium and long term.

In fact, the first quarter of 2024 accumulated more than 551 million euros invested in Spanish startups, according to these data. Does this sound like a lot? If we compare it with the first quarter of 2023, when €519 million were recorded, we observe a slight recovery.

Throughout 2024, total investment in startups in Spain exceeded €3.1 billion, marking a 36% increase over 2023, driven by the growth of mega-rounds and the interest of international investors, according to Emprendedores.

Given this situation, how can you build a startup that is attractive to investors?

In this article, we will highlight some fundamental keys to being investable. We will discuss the factors that investors consider crucial when evaluating a startup and the strategies that entrepreneurs can implement to maximize their chances of securing funding. From the initial idea to the development of the business model and execution of the plan, each stage of the process plays a vital role in creating an attractive startup for investment.

Define a solid and scalable vision

Investors are looking for returns, so the secret is to show them that the startup is not good today, but that it will be good tomorrow. They are betting on you because they believe you have potential and you must sell them the strategy that will respond to their trust. Therefore, one of the first keys to be investable as a startup is to have a clear and scalable vision. If you want to learn the main principles to scale, read this article. “You can lose money in the short term, but you need the long term to make money,” says the renowned investor and manager Peter Lynch. A projection showing that the startup has a clear plan to grow and reach a broader market, increasing the likelihood of significant profits, is critical. Being scalable, i.e. being able to increase revenues without increasing expenses, is essential to raise funds. For this, the roadmap has to be specific and clear, which will help to mitigate doubts about the possible source of revenue.

Build an experienced, synergistic and industry focused team

The founders and the team is a crucial factor in attracting investors, as they will scrutinize and consider the passion, background, skill and decision-making of the management group. In addition, they expect it to be flexible, and open to change if ever necessary. There are many factors (even unquantifiable metrics, such as intuition) that will determine whether or not they invest in you, but one fact is clear: they have to have confidence in who they are giving their money to. “My biggest mistake is probably looking too much at people’s talent and not personality. I think it’s important for people to have a good heart,” said business magnate and investor Elon Musk. Investors are looking for a team with complementary skills, relevant experience and a proven track record of execution, but also people who convey humanity and confidence. Showing a solid and committed group will increase the chances of attracting money.

Have a viable and sustainable business model

This involves having a clear understanding of how your startup will generate revenue, maintain profitability and grow over time. So you need to specify the customer segment, understanding their demographics, needs, behaviors and preferences to be most effective; the value proposition, identifying the benefits or solutions you offer, and how they differ from existing alternatives; the distribution channels, establishing how you will reach your customers and how you will distribute your product or service effectively; the sources of income; the cost structure; the growth strategies, being realistic and with a permanent eye on the future; or the competitive advantage, which must be sustainable over time or adaptable and may be related to price, quality, customer service, technology, innovation, among other factors. The business model can evolve as the startup grows and adapts, therefore, it is necessary to be willing to adjust it according to the comments and needs of the market, as well as those of the investors themselves.

Be open to feedback and learning.

The final argument of the previous section is related to this quality, useful to be attractive to investors. This line of thinking allows you to constantly improve, adapt quickly to market needs and stay competitive. In addition, getting different perspectives, such as from customers, experts, entrepreneurs or investors, allows you to refine and adjust your proposals. In the same way, you can discover opportunities that you had not previously considered. Also, by receiving open feedback and acting on it, you show investors that you value other opinions and are willing to learn and improve. This contributes to building strong, trusting relationships.

Demonstrate traction and validation

Investors are looking for tangible evidence that your product or service is in demand in the marketplace. Eric Ries, author of The Lean Startup, emphasizes the importance of measuring and learning quickly through iterations and experiments. Iteration is the process of repeating over and over again the process of devising, testing and redefining what we want to launch and make it investable. As for traction, it refers to the metric that shows how well (or poorly) you are taking your business model to market and how well it is being accepted by your potential customers. In short, you show whether it is reasonably validated, something basic because it demonstrates results. These elements help assess risk and ROI potential and allow you to make more informed decisions. Undoubtedly, this is one of the signs that most attracts investors, because it is a symptom that there is a real need to which you are responding.

If we focus on the specifics, remember that each investor has their own preferences and additional criteria, so it is important to tailor your approach to the needs and expectations of each of them. Therefore, the more you know about the person or group you want to sell the project to, the better. Also, keep in mind that the bond you generate with investors is often as valuable as having a promising business on your hands.

En definitiva, convertir tu startup en una empresa invertible no es una tarea fácil. Cada negocio es único y su caso puede no ser aplicable para el resto, pero es cierto que respetando las estrategias mencionadas anteriormente, puedes aumentar significativamente tus posibilidades de atraer el capital que requieres para dar el siguiente paso.