Series | Insights into investor processes
Why investors don’t invest in companies – but in convincing investment cases
Many entrepreneurs assume that investors will primarily invest in their product.
The logic behind this is understandable: If the technology, idea or market potential is convincing, it should be possible to find an investor.
In investor processes, however, the picture is often different.
Investors rarely invest in a product alone – and not just in a company.
They invest in a convincing investment case.
An investment case describes the interaction of several factors:
– Business model
– market potential
– competitive situation
– strategic positioning
– economic perspective.
Only when these elements fit together does a coherent overall picture emerge for investors.
We therefore experience a similar situation in many investor processes:
companies present their technology or product in great detail – while investors primarily want to understand how a scalable and economically viable business model can be created from it in the long term.
This is precisely where a gap often arises.
A convincing investment case is not created by chance.
It is the result of a structured analysis of the company and its market environment.
This involves questions such as:
– What are the actual competitive advantages?
– How sustainable is the competitive market position?
– What growth drivers can realistically be derived?
– How can sales, cost structure and margins develop?
Only when these questions have been clearly answered can an investment story be created that investors can understand.
This is precisely why this step is central to our advisory services: together with the company, we work out the investment case so that investors not only understand the product, but also the economic perspective of the company.
A convincing case creates trust.
And trust is the basis of every investment decision.
But even the best investment case is only effective if it reaches the right investors.