What Investors Look for Before Funding Your Startup

May 14

As someone who’s raised capital in tech, real estate, and film, I can tell you this: investors don’t fund ideas—they fund risk-adjusted returns. And before they write a check, they’re asking themselves a set of very specific questions.

Whether you’re pitching a venture capitalist, a private equity firm, or a niche investor in entertainment or real estate, here’s what most are evaluating—often in the first 10 minutes of your pitch.

1. Founder Credibility & Domain Expertise

Investors want founders who know the battlefield. They ask:

Do you understand your market better than anyone?
Have you built something before?
Can you clearly explain your vision and plan?

If you’re not yet a seasoned founder, build credibility by:

Hiring a strong advisory board
Highlighting any industry-specific experience
Bringing early traction or partnerships to the table

2. A Scalable Business Model

Even if your product is great, the model must scale. Investors will look for:

Recurring revenue potential (SaaS, DTC subscriptions, licensing)
Gross margins and unit economics
Customer acquisition cost (CAC) vs. lifetime value (LTV)

Real estate and film investors, for instance, want to see a clear ROI window (short-term and repeatable).

3. Traction, Not Just a Pitch Deck

Data trumps hype. Investors expect:

Revenue (or pre-orders / waitlist signups)
Active users or beta testers
Signed letters of intent (LOIs) or partnerships

On USInvestorData.com, we’ve found that 78% of funded startups had some form of traction before raising seed or Series A.

4. Clear Use of Funds

One of the biggest red flags? Vague funding requests.

Break it down:

$200K to hire engineers
$150K for paid acquisition
$100K for legal/IP + runway
Be specific and show how this gets you to your next milestone.

5. Market Size & Timing

Even the best product will fail in the wrong market.

Investors ask:

How big is the market (TAM/SAM/SOM)?
Why is now the right time to launch?
What’s your unfair advantage over incumbents?

6. Exit Strategy or Return Path

They’re not just investing in your passion—they’re investing to make money.

They’ll ask:

Is there a path to acquisition?
Can this become a cash-flow business?
Are comps showing exits in your space?

In film and real estate, this means projected ROI and exit timeline. In tech, it means multiples and buyout potential.

Final Thoughts: Investors Fund Systems, Not Just Startups

At USInvestorData.com, we’ve analyzed thousands of investor profiles, and one theme is clear: They invest in systems that reduce risk and multiply capital.

As a fund manager across Lockwood 2 (real estate) and FilmMoney (film lending), I’ve sat on both sides of the table—and what wins is preparation, positioning, and persistence.

If you want to find the right investor and know what they’re looking for before you pitch, start your research on USInvestorData.com. We’ve already done the hard work of filtering real, verified investors by sector, check size, and deal activity.

David Brown