Becoming investor-worthy: early stage companies seeking funding need to raise the bar.

• Author: Blake, Brock
• Position: Money Talk

Charles Dickens once wrote, "It was the best of times. It was the worst of times." While many high-center on the latter part of that statement calling today's environment the worst economic times of a generation, we should not forget that tremendous business opportunities are out there. Frankly, it is often during difficult times that the innovative ideas of bright, capable entrepreneurs emerge to drive the next generation of economic growth.

Because FundingUniverse works with hundreds of banks and nearly 1,000 angel investors across the country, we have a fairly strong pulse of the current economy. In fact, there isn't a day that goes by where I am not asked about the current state of angel funding and bank financing. Most people assume (because of all the bad news that we see on the news) that all early-stage funding has dried up. While the amount of deals funded has clearly dropped from last year, resources are still finding their way to good strong companies.

With a reduction in the amount of available capital and a steady flow of entrepreneurial ideas, the current landscape means that there is a significant increase of new companies and ideas competing against each other for venture-type funding.

Given these economic shifts, how does an early-stage company stand out or increase its chances to secure funding? Our experience at FundingUniverse has shown that there are a few fundamental steps that an early-stage company can take to become investor-worthy.

Traction

Today's investors want to see earning potential and tangible components of a business concept. Investors look at a company's past results as a good indicator of future expectations. Traction as shown by solid revenue, customer contracts, completed technology development, competent personnel, intellectual property and established contracts help establish viability to both a team and potential investors.

Future Liquidity

If a potential investor does not see a clear path to get his or her money out of the company within a reasonable amount of time, the investor won't be interested. Investors typically look for returns around 10 times their initial investment (i.e., put in $100,000 today; get $1 million back in five to seven years).

Management Team

Investors invest in people. A company's ability to attract great talent that inspires trust can greatly enhance an early-stage company's...