What investors really want
Business angels and venture capital review business model, team, market potential and financial metrics. A clear growth story and realistic valuation are essential. Cashflows, unit economics and scalability are in focus.
Investors look for companies operating in attractive markets with differentiated offerings. The team must convince – not only professionally, but also in its ability to lead the company through the next growth phase. Relevant metrics such as CAC, LTV and burn rate must be consistent and demonstrate business model scalability.
An inflated valuation hurts more than it helps: It scares off investors and can bring the entire process to a halt. A well-founded but realistic assessment based on comparable rounds and actual performance is better.
Documents for due diligence
Data room, business plan, financials: investors expect structured documents. Professional preparation accelerates the process and signals seriousness. M&A advisory supports founders in preparation.
The data room should contain all relevant documents: shareholder agreements, key customer contracts, financial plans, organisation chart. Gaps raise questions and delay due diligence. An up-to-date business plan with clear assumptions and scenarios is mandatory – as are meaningful financials showing past development and future projections.
Documents should be consistent. Contradictions between business plan and actual figures undermine credibility. Thorough preparation pays off – it reduces follow-up questions and shows the team works professionally.
Valuation and negotiations
Startup valuation follows different logic than mid-market companies. Pre- and post-money valuation, vesting, share structure – experienced advisors know the standards and guide negotiations.
In early phases, comparable approaches often dominate. Later, DCF-like considerations gain importance. Understanding post-money valuation after the round is key for founder dilution.
Additional points like vesting, anti-dilution clauses, tag-along and information rights can significantly affect the actual value of the stake. An M&A advisor or lawyer with experience in growth financing helps navigate terms and negotiate fair conditions.