When it comes to finding investors for your startup, it’s more like a marriage than a mortgage. Of course, there’s a financial transaction involved, but who invests in your startup is just as important as how much they invest. Asking for money can be easy, but finding a perfect match? Well, that’s the real challenge.
Here’s what you’ll need to consider when seeking investment.
What investor is the right fit?
No two investors are alike, and the key to finding the right fit is making sure they align with your industry, values, or goals.
First ask, what are your goals in finding an investor? Is it a bigger pool of contacts, expert advice, or additional funding? It may be a combination of all three, but you’ll need to prioritize which goal holds the highest value.
Next, consider the values or culture of your current team. If your office is more sweatpants and flip flops, taking on an old school suit and tie investor might lead to clashing. When an investor joins your team, they’ll likely be around for many office, brand, and cultural decisions. Your investor should align with your team’s culture, or what your culture aspires to be.
Finally, think about what industry you need experience in. Likely, It’s the one your business is focused on. Your investor will cut you a check, certainly, but they’ll also be able to provide valuable insight when deciding what to do next. For example, if you’re looking into manufacturing your product, it might be a good idea to find an investor with experience in manufacturing.
What value will they bring beyond money?
Investors can offer more than just financing–depending on who you work with, they could help bring value beyond the checkbook. An investor’s knowledge can be more influential than the funding they provide.
To better pinpoint what an investor can bring to the table, you should first try to locate any knowledge-gaps within your team. Perhaps your team is heavy on technical skills, but light on business growth. Finding an investor who builds out the business side of your venture could help foster major growth.
Or, you might want to bring on an investor who had a proven track record in your industry and can easily provide the contacts you need to get sales off the ground.
Value doesn’t just mean the number of zeroes on the check, it’s also the means by which an investor can help you grow.
What do their references have to say?
Finding the perfect investor is too far from making the right hire in some ways. Initial meetings with an investor might go swimmingly, and their terms sheet could be agreeable, but the deal’s not done yet.
Find a way to reach out to previous colleagues, or other businesses your investor has funded to get a 360-degree view. Just like you’d reach out to references for a hire, you’ll want to know about your investor’s business background.
As you set out to find an investor, you might be thinking more about the money than the person behind it. But, an investor is more than a monetary contribution, they’re a key player to the growth of your company. Once they invest, they’ll have a say in what happens next, so you’ll want to make sure you all have the same goals in mind.