Entrepreneurs need to determine which VCs or angel investors to seek to raise money from. Don\u2019t waste your time with investors who aren\u2019t likely to be interested in your business\u2014either because of the company\u2019s industry, stage or otherwise. Some of the more important considerations when choosing investors include:<\/p>\n
Each investor has a different area of focus\u2014some focus on life sciences companies, while others focus on software companies, for example. Even within broad categories, some investors have a more narrow industry focus, such as digital media, mobile, semiconductors or clean tech. Choose investors that understand your business and industry. They will be in a better position to help you build a successful company by leveraging their experiences and industry contacts on your behalf.<\/p>\n
The company\u2019s stage of development is an important factor when assessing which investors are most appropriate. Some investors will only invest in the seed or initial rounds of funding. Others will invest later, but only if they also invested in the first round, and others won\u2019t invest until the company is more mature. Understand the stage preference of the investors you target so you don\u2019t waste your (or their) time.<\/p>\n
The location of the investor in relation to the company may also be relevant. Many angels, for example, prefer to invest in companies within a reasonably close proximity so that they can more easily monitor their investments and provide hands-on assistance to the company. Geographic proximity is generally less important to venture capitalists, but even they tend to make more investments closer to home or in certain geographies\u2014especially when it comes to investing in early rounds of funding.<\/p>\n
A further consideration is whether the investor has already invested in a company doing something very similar to what your company is looking to do. It is definitely a plus to have investors that have direct experience with companies similar to yours. Their insights into your industry, customer base and business model will be very valuable. However, if the investor already has a portfolio company that is a competitor or otherwise too similar to yours, then conflicts (or worse) can arise. In that case, most investors will want to avoid those conflicts themselves and won\u2019t invest in your company. Even if they would, why chance it?<\/p>\n
Investors will ask a lot of questions about your company, your technology, your team and your strategy. They should\u2014they are making a big bet on your company. But aren\u2019t you betting your company\u2019s success on them as well? Ask around. Talk with other entrepreneurs that have raised money from your potential investors. If you are expecting them to continue to invest in the company as it grows, do they have the means to do so? How to they behave when things don\u2019t go well? Every company has its ups and downs, and yours will too. Investors can\u2019t and shouldn\u2019t blindly continue to support companies that are failing, but you should try to pick investors that have a reputation for being supportive even during challenging times.<\/p>\n
The point is before you start contacting investors, you need to do your diligence in determining which ones will be the best for you and which ones are most likely to make an investment in your business. A good place to start is with the investor\u2019s website (if it has one), where you\u2019ll be able to review the investor\u2019s investment approach, a list of portfolio companies and the backgrounds and investments made by each investor and their team. If there isn\u2019t a website, then you can search the Internet under the investor\u2019s name for press releases regarding investments made by that investor. Ask people in your network. If you work with an attorney that specializes in working with start-ups and venture-backed companies, the attorney will likely have strong connections with most investors and can help you build a list of the most promising potential investors. Your accountants, bankers and other advisors may also have good insights for you as well. Once you\u2019ve done your research and made a list of investors to approach, you\u2019re ready to plan how you get meetings with them.<\/p>\n","protected":false},"excerpt":{"rendered":"
Entrepreneurs need to determine which VCs or angel investors to seek to raise money from. Don\u2019t waste your time with investors who aren\u2019t likely to be interested in your business\u2014either because of the company\u2019s industry, stage or otherwise. Some of the more important considerations when choosing investors include: Industry Focus Each investor has a different […]<\/p>\n","protected":false},"author":915,"featured_media":7777,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[43902],"tags":[],"class_list":["post-7737","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-professional-development"],"acf":[],"yoast_head":"\n