Factors that deter investors

After finishing the process of filing an LLC, entrepreneurs need to line up funding for their new venture. Entrepreneurs should be aware of the red flags, which will discourage investors from supporting a company.

Martin Zwilling, the CEO and founder of Startup Professionals, offers seven factors that investors consider high risk.

First, is an inexperienced team. Investors look for people with knowledge in the market the startup wants to reach. The sector a startup is planning to reach is also an important issue as certain areas have a high rate of failure.

If a business model is dependent on government approvals that could take a long time or requires political connections, can make an investor wary of supporting the project. However, products such as a new medicine can result in high returns if successful.

When a significant initial investment is needed to boost manufacturing for products such as electronic chips, almost all except for the largest investors will pass, Zwilling writes for Business Insider. On the other hand, ventures such as web-based businesses, can do more with less capital.

Finally, startups that have operations in another country may cause trepidation. The market rules vary from nation to nation, and it is harder to manage and predict success.

Melissa Clark
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Melissa Clark

Head of Content & Customer Marketing at Incfile
Melissa sets the vision for Incfile's content marketing and customer relationship management. Melissa has more than 10 years experience in various marketing roles, and a passion for supporting small businesses as they incorporate and grow. She loves sharing information that will help business owners maximize their LLCs, Corporations and Nonprofits. In her spare time, Melissa is an active member of The Junior League and enjoys running half marathons.
Melissa Clark
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