Investors are key partners in gaining the startup capital you need to grow a successful business. But pitching them is challenging if you don’t know what investors are looking for in a startup.

That’s why we invited Bernard Robertson III and Toni Hackett Antrum, venture capitalists, wealth advisers and founders of Reconstruction Fund, to speak at Baton Rouge Entrepreneur Week (BREW) and share what they look for in a portfolio company.

There are several types of startup capital beyond investing, including small business loans, business credit cards and personal loans. Traditional banking options don’t typically provide a partnership for your small business, though — after all, high interest rates are not the same thing as a vested interest.

Working with an investor is different, Antrum pointed out. Because they’re looking for a return on their investment, venture capital firms and angel investors only succeed if you do, too. And as potential partners in your success, Robertson and Antrum laid out some of the green and red flags they see from entrepreneurs raising startup capital.

Here are some highlights from their BREW session, “Preparing for Investment Opportunities.” Read on to find out what makes your startup attractive to an investor and how you can find startup capital.

Start With the Business Plan

Your business plan is fundamental to raising money via investment. Without one, you can’t even approach investors seriously. Because it’s so important to your future, your business plan has to be very intentional and well thought-out.

“You really have to spend time on the business plan; that provides the roadmap,” Antrum said. “And from that business plan, you’re able to create a really compelling pitch deck.”

Think of your business plan as a game plan, Robertson said. Football coaches develop game plans and revise them regularly based on changing conditions. Small business owners need to take the same approach.

“When you’re a founder, when you’re out looking to scale, that business plan is just like that game plan,” he said. “You’re going to continuously need to update it [and] change it for the situation that you’re currently facing.”

To make updating your plan easier, don’t start with a 100-page document detailing everything from basic cash flow to office space. When you put that much work and detail into something, you’ll hesitate to update it as needed. Instead, develop a tight but responsive business plan of five to 10 pages that can flex as circumstances change.[a]

Finally, just like a sports game plan, focus on defense. Many founders with niche products come into pitches saying they don’t have any competitors, but that’s a red flag to investors. Venture capital firms want to see that you’ve identified your competition and know how you’ll differentiate yourself.

Project Your Financials

Investors want to see where you expect revenue to come from and how it’ll flow into your business. Develop financial predictions to demonstrate the trajectory you expect revenue growth to take. No one expects 100% accuracy from your startup finance projections, but you should be able to demonstrate that you’ve put a lot of thought and work into it.

“All of this is all very dynamic. It changes. We know that,” Antrum said. “But you want to create a document that you’re going to be able to continue to update.”

Keep your projections realistic, she continued. Many founders start with an annual projection and average an amount per month. But the expected growth from $0 to $500 in the first month to where you expect to be by the end of the year is extremely important for investors to see.

The best way to generate robust financial predictions to share in your projections is to look to the past. “The only way that you can communicate what you’re going to do in the future is by taking what you’ve done in the past and have been able to effectively write down into your books,” Robertson said.

Keeping detailed books is a green flag for investors. You’ll either have to hire a professional to manage your profit and loss sheets or become very adept at doing it yourself. There’s a wealth of information there that will heavily influence an investor’s decision.

Follow the Standard Investment Trajectory

When it comes to raising funds, don’t try to jump ahead of the curve. Businesses typically go through several rounds of investing, and each one provides an opportunity to improve your pitch before moving on to the bigger ask. That starts with the seed round, when you seek financial partners among your family first (as the most forgiving audience). Asking someone to dip into their personal savings to invest in you isn’t easy, but it’s an important step for perfecting your pitch.

From there, practice on your friends. “When you get to the friends, you’re able to start communicating [your idea] a little bit better,” Robertson said. “You’re practicing even more, your pitch gets refined, that deck gets refined. That’s how you start to build up to those additional rounds.”

Some founders opt to skip the friends and family investment rounds — often because they’ve already generated some buzz in their earliest stages of development. However, they rarely build to a sustainable investment trajectory, since each of the following investment rounds (series A through D) builds on ‌progress achieved since the previous round of funding for your startup.

“They’re usually at that point where they’ve had all of that steam built up, and now it’s evaporating,” Robertson said. Be cautious about getting ahead of yourself — if you score a meeting with a high-level venture capital firm before you’re ready for it, you could undermine your chances of success.

Several types of startup funding options are available, but practically every startup will need to approach investors at some point in their journey. Plan to bring a comprehensive understanding of your business’ unique value proposition and its potential for growth to your investor meetings to form a solid foundation for building lasting partnerships.