For a startup, getting investment is a way to develop your project, enter new markets (and sometimes just an opportunity to survive). And what are the motives behind those who invest in new, often risky businesses?
Here are 5 reasons why investors might be interested in your startup.
Reason # 1. Co-Investment Trend
Co-investment is becoming an increasingly proven portfolio strategy.
Non-traditional investor education through early stage startup and technology investment clubs have seen seed investing become a team sport, with opportunity sharing and co-investment becoming as viable a strategy as ever to invest successfully.
Reason # 2. Quick exit to a new market
For large companies, buying a startup is a convenient way to enter a new market for themselves. It can take a lot of time to develop your own product – it’s easier to buy a ready-made project with a team.
Reason #3. Elimination of a competitor
An investing company can buy a startup that may become a competitor for it in the future. This is a very common practice. “Big companies look ahead for years or even decades. They buy start-ups in order to engage in a direction that they have in a strategic plan right now.
Reason # 4. Implementation of strategic goals
Sometimes large companies invest in serial entrepreneurs, top managers and experienced teams who have already launched several successful startups. As a rule, this is done for a specific task.
Reason # 5. Creating an analogue of a successful business
When a strong player enters the market, others try to replicate his success. If someone’s product is in demand, the investor can invest in the creation of a similar project in order to win back his piece of the market.