Starting a new business is a challenging and exciting endeavor for entrepreneurs. As startups navigate from ideation to growth, funding plays a critical role in the journey. This is where investors come into the picture.
Finding the right (strategic) investors plays a crucial role in the success of any business. However, finding the right investors for your startup can be daunting.
The below picture should help you co-relate:
How much you want to raise (i.e. stage and amount of capital)?
For what purpose (i.e. funding usage)?
And, whom to target (i.e. category of investors)
Here are a few strategies for startups to find matching investors.
Define Your Business Goals and Needs
Before you begin your search for investors, it's essential to determine:
Amount of funding you need: This helps to connect with those investors that are comfortable investing this amount and to be able to provide follow-on funding.
Type of investor you need: Do you need someone with experience in your industry, or are you looking for someone with expertise in finance and fundraising?
What you need besides funding: Do you need help in business development, partnerships/expanding sales channels, hiring, or marketing strategy?
Knowing your business goals and needs/wants will help you narrow down your search and find investors who are a good fit/match.
Network, Network, Network
Networking plays a crucial part in any startup's success, and it's an effective way to find matching investors. Attend events and conferences related to your industry or startup events and meet/connect with potential investors. Join LinkedIn startup groups and participate in online forums to connect with like-minded individuals. You never know who you might meet and what opportunities may arise. Use this template for the introduction.
Use Online Platforms
There are many online platforms, such as LinkedIn, AngelList, and Crunchbase, that help startups/entrepreneurs connect with investors. These platforms allow you to create a profile for your startup and enable you to browse through and find potential investors. Please make sure your profile is detailed and informative, highlighting your business goals and achievements.
Register here to connect to our 1,200+ strategic investors.
Referrals can be an excellent way to find matching investors. Reach out to the entrepreneurs/founders whom they have invested in, mentors, or industry professionals and ask for referrals to potential investors. People in your network may have connections to investors who may be a good fit for your startup. Shamelessly ask for referrals, the only worst thing that could happen is they would decline to refer.
Research potential investors, their portfolio companies (investment history, thesis), and whether they have invested in the last 6 months.
Find out what sectors/startups they have previously invested in and what their investment strategy/thesis is i.e. sectoral preference, funding stages, as well as funding ticket size.
Ideally, you should avoid those investors who are already invested in your competitors. Highly unlikely they would invest in you.
This information helps determine if they are a good fit for your startup.
Questions to help you in researching the right investors?
Which investors are investing in the domains/industries that you operate in?
Do they invest in the funding range and/or stages that you're seeking?
What have been their recent investments?
Have they invested in the last 6 months?
Do they've funds to invest?
Who is the investment analyst / senior partner to connect to?
Attend Pitch Events
Pitch events are a great way to showcase your startup and meet potential investors. Prepare a compelling pitch and participate in pitch events in your city/state (location plays a role) or industry-related events. Pitch events can be a great way to get your foot in the door and gain valuable feedback on your startup.
Build Long-term Relationships
Investors are human too. If you treat them like future potential friends rather than some sort of power figure, then it starts the relationship in the best way. Most importantly, do their values and goals match yours?
"Your relationship with an Investor is just like a marriage, and from which it is difficult to divorce."
Finding the right investor can take time and needs patience. Don't be discouraged if you receive rejections or no responses.
It took Melanie Perkins (Founder of Canva) 100+ rejections over 3 years, but her persistence eventually helped her secure the $3 Mn seed round that got Canva off the ground in 2013.
Persistence is key when it comes to finding matching investors.
Personal Story by Joel Gascoigne, Co-founder & CEO, Buffer
Perhaps the most important part of our seed funding success was primarily because both co-founders would sit down in coffee shops and encourage each other to keep pushing forward, i.e. to send that next email asking for an intro or a meeting.
Overall, we probably attempted to get in contact with somewhere around 200 investors.
Of those, we perhaps had meetings with about 50, and we closed a $450K seed round from 18 of these investors.
It proves that persistence is a crucial trait for any founder!
Keep Track of Conversations and Follow-up
Tracking the conversations and following up with investors demonstrates that the startup is well-organized and serious about securing funding. Remember, follow-up is the secret to building a strong relationship with the investors, which 95% of the founders never do in the first place.
Use our tracking sheet template for follow-ups.
In conclusion, finding matching investors for your startup requires time, patience, effort, and persistence. By following these tips i.e. defining your business needs, networking, using online platforms, seeking referrals, researching potential investors, attending pitch events, and being persistent, you can substantially increase your chances of finding matching investors for your startup and achieving stupendous success.
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