Securing investment is never just about having a good idea, it’s about showing that your business is structurally prepared to absorb capital and turn it into scalable growth. And that starts with one thing: your business model.
Why investment isn’t just about potential
Many founders assume that if their product solves a real problem and they can show some traction in the market, investment will naturally follow. But capital doesn’t flow to potential alone, it flows to structure, predictability, and growth logic. Venture capital, private equity, and corporate investors all ask the same core question: If I put 1 euro in this company, what does that 1 euro become in 12, 24, or 36 months? And just as important: What needs to happen operationally for that growth to occur, and can the team deliver it?
That’s why businesses that feel “ready” internally still struggle to raise capital. Not because they lack vision, but because they haven’t built a model that translates vision into measurable outcomes.
Why your business model is the first thing investors assess
An investor might love your product, agree with your mission, and admire your team, but if your business model doesn’t support sustainable growth, their capital won’t fit. An investment requires a system capable of scaling. Not just more of what you already do, but better, faster, and with stronger margins. That’s why the structure of your business model, how you create, deliver, and capture value, is often the deciding factor in whether an investor moves forward.
Think of your business model as a gearbox in a car. Without the right structure in place, putting in more power (capital) just spins the wheels.
Four structural gaps that limit investability
In our experience advising founders across sectors, the following four issues are among the most common and fixable blockers to investment readiness.
- Reliance on non-recurring revenue
You’ll struggle to build predictable growth if your business depends on project-based income, ad hoc deals, or grant funding. One-off revenue, even when high value, creates volatility and makes it difficult to model future cash flows or returns.
From an investor’s point of view, that unpredictability introduces risk. If your next quarter’s revenue depends on winning a few big contracts, growth capital might do little more than extend your runway, without moving the business forward.
What to do:
Consider how you can evolve towards recurring revenue models. This might mean introducing subscriptions, long-term service contracts, or productised offerings. Even partial predictability, e.g. a 6-month retainer, is far more attractive than chasing individual deals month to month.
- Thin or inconsistent margins
Many early-stage companies accept low margins in exchange for early clients. That’s understandable. But if those economics don’t improve with scale or deteriorate, your growth story weakens significantly.
Strong gross margins (typically >60%) signal that your offer has pricing power and operational efficiency. They also create the space to reinvest in sales, technology, and people, the real engines of scalable growth.
What to do:
Revisit your pricing model and delivery costs. Where are you undercharging? Which clients or segments create margin pressure? Consider bundling high-cost services with low-cost automation or introducing pricing tiers that reflect the real value your solution delivers.
- Scalability in theory, not in practice
Many businesses claim to be scalable, but their operations tell a different story. If every new customer requires customised onboarding, extensive internal coordination, or unique features, your costs scale linearly, or worse.
Investors look for operational leverage: the ability to grow revenue without growing costs at the same rate. This doesn’t just mean technology. It means standardised processes, modular offerings, and thoughtful resource allocation.
What to do:
Conduct a process audit. Which parts of your delivery could be templated, automated, or offloaded? Are there steps that depend too heavily on specific people or manual inputs? Scalability begins with repeatability, and even complex solutions can often be broken into repeatable components.
- Founder-centric operations
In the early days, it’s normal, even necessary, for founders to be involved in every decision, sale, and delivery. But if your business still relies heavily on the founder to function, it introduces significant key-person risk. This not only limits operational capacity, but it also limits investability.
From an investor’s point of view, the concern is simple: What happens if the founder gets pulled away? Can the business continue to grow?
What to do:
Build structures that decentralise responsibility. That might mean bringing in functional leads, investing in training, or documenting workflows. Even small steps toward operational independence send strong signals to investors about your maturity and readiness to scale.
What a strong, investable business looks like
Let’s turn to the positive side. What does a business model look like when it is ready for capital? Here are the core characteristics that investors look for, whether they’re angel investors or institutional funds.
- Repeatability
A repeatable model means your sales and delivery processes don’t need to be reinvented every time. Your product or service works the same way for each client segment, and your team knows how to execute without improvisation.
How to build it:
Define your offering clearly. Resist customisation unless it scales. Build materials (e.g. onboarding guides, sales scripts, demo flows) that can be used again and again.
- Scalability
A scalable model allows for output growth without proportional increases in input. This might mean tech automation, templated delivery, digital distribution, or a trained operations team.
How to build it:
Segment your operations. Which parts scale well? Which parts don’t? Begin investing in process, tooling, and structure that remove human bottlenecks as early as possible.
- Healthy margins
Margin is not just about profitability, it’s about flexibility. High-margin businesses can afford to hire faster, experiment more, and weather downturns.
How to build it:
Get clear on your cost-to-serve. What drives your direct costs? Can these be reduced, bundled, or shifted to the client side? Can you move low-margin work out of scope altogether?
- Capital efficiency
This is where many founders struggle, even with a good model. Capital efficiency means being able to show exactly what happens when the investment comes in.
Investors want to see that their funds will be used to fuel proven engines: customer acquisition, retention, process efficiency, or tech enablement. Vague plans for “growth” or “hiring” don’t inspire confidence.
How to build it:
Build simple scenarios. If you raise €500K, how many months of runway does that provide? What will you spend it on? How many new customers or markets will that open up, and when do those investments return cash?
Final thoughts
You don’t need to have it all figured out. Very few early-stage businesses do. But what sets fundable companies apart is not perfection; it’s clarity, discipline, and direction. An investable business model tells a clear story: This is how we work, this is how we grow, and this is how capital makes us faster, better, and more valuable.
If your model doesn’t yet tell that story, that’s okay. It can be developed. Most investable models are not built in the first six months; they emerge through refinement, market learning, and strategic iteration.
At No Five Trees, we work with founders to do exactly that. We help translate strong products and capable teams into structured, investable growth stories. We understand what investors look for and how to help you get there.
