What investors look for in a BC small business

We look at businesses as investors and growth partners through sedighi.ca and SAZ, and we have sat across the table from many owners who wanted capital. The owners who received it were not the ones with the best slides. They were the ones who could answer, with evidence, a short list of questions that every serious investor asks in one form or another.

This guide lists those questions, explains why each is asked, and describes what a persuasive answer looks like for a small business in British Columbia. It is not investment advice and does not describe any particular investment. Raising money from investors engages securities law, and your lawyer and registered advisers must be part of the process.

Is there proven demand

The first question is whether customers already pay for what you sell, at a price that leaves a margin, and whether they come back. An investor wants to see revenue history, customer counts, repeat rates and the trend, not a market size estimate. A business that has sold to real customers for a few years and can show the pattern has answered the question. A business with a forecast and no sales has not, however large the market.

Our Growth Partner model is explicitly for companies with proven demand, in the range of roughly $500K to $30M in revenue, and most private investors in small businesses apply a similar filter. If you are earlier than that, the honest path is usually to prove demand on a small scale first.

Do the unit economics work

The second question is whether each sale makes money after all the costs of making it, including the cost of winning the customer. Investors will ask what it costs to acquire a customer, what a customer is worth over time, what the gross margin is and whether those numbers improve or deteriorate as you grow. A business that loses money on every sale and plans to make it up on volume is asking an investor to fund the losses.

Have these numbers ready and know how they were calculated. If you do not track them, start now, because an investor who has to build them from your statements will build them conservatively.

Does it run without you

The third question is what happens if the founder is unavailable. An investor is buying a share of a business, not of a person, and a business that stops when the owner stops is not investable at any price. They will look at the team, the systems, the documentation and the decision-making. They will ask who the customers know, who the suppliers call and who could run the place for a quarter.

This is the same owner dependence that decides the multiple in a sale, and the fixes are the same: delegate decisions, document processes, develop a second layer of management, and prove it by stepping away.

Revenue, margin and customer history for several years
Customer acquisition cost, customer value and repeat rates
Organisation chart and the decisions each role actually makes
Written processes for the work that produces the revenue
Clean monthly financial statements that tie to the bank
A list of the risks you already know about and what you are doing about them

Is the plan credible and is there a way out

Investors read plans for what the money will do and whether the projections are built from the business's own history. A plan that assumes growth rates the business has never achieved, costs that do not rise with revenue, or a market that behaves differently from the way it has behaved for you, reads as hope. A plan built from your actual acquisition cost, your actual conversion rates and your actual capacity reads as a plan.

They also need a way to get their money back. For a small business this usually means a sale of the company, a buyback by the founder from profits, or an ongoing distribution of earnings. Which one you intend, and when, is a term of the investment and should be stated plainly. An investor who cannot see the exit will price the investment as if there is none.

What persuades, and what does not

Honesty about weaknesses persuades, because every business has them and an investor who finds one you did not mention will wonder what else you left out. Clean records persuade, because they show how you run everything. A specific use of funds persuades. A founder who knows their numbers cold persuades more than any presentation.

What does not persuade: market size slides, comparisons to large companies in other countries, projections that hockey-stick, and a refusal to discuss what could go wrong. If you want to prepare a business for an investor conversation, or to understand how a growth partnership with us works, call or text (604) 632-4959 or email ali@sedighi.ca. A Strategy Session with Ali runs 90 minutes for $499.

Questions this guide raises

Do investors in small businesses want control?

Usually they want protection rather than control: a say in major decisions, regular information, and rights if things go wrong. Some want board seats or veto rights over specific matters. What is reasonable depends on the size of the stake and the risk, and it is negotiated with your lawyer involved.

What return do investors expect from a small business?

Enough to compensate for the risk of a private, illiquid investment, which is higher than what public markets offer. The specific figure depends on the investor, the business and the structure, and we do not quote numbers here. Understand that an investor's required return is the cost of their money, and compare it to debt before you choose equity.

Should I approach investors before my business is profitable?

For most small businesses, no. Investors in this segment want proven demand and working unit economics. If you are earlier, the better path is to prove the model at a small scale with your own resources or debt, then raise when you have evidence. The exceptions are businesses with large unavoidable upfront costs, and they need specialised investors.

What is the difference between an investor and a growth partner?

An investor provides capital and oversight. A growth partner provides capital or works for a share of results, and embeds people in the business across functions. Our Growth Partner model does the latter, with Ali's team working inside marketing, sales, operations, finance and technology. The right choice depends on whether you need money, capability or both.