Creating a targeted list of investors is crucial for efficient fundraising, as it helps founders strategically approach potential investors and avoid the perception of being rejected after a prolonged fundraising period. This video emphasizes the importance of a well-researched investor list to expedite the closing of a funding round.
What this video covers
What is the importance of a target list? The minute that you say that you’re raising money, the clock starts to tick. If you have not been able to raise that round in three months from that time that you first said that you were raising money, then essentially, everyone that you’re going back to, they are going to think that everyone else rejected you, and for that reason, you’re going after them.
The importance of a target list: At the end of the day, a target list is going to give you the opportunity to reduce the amount of time that it takes from being out there to closing the round. You want to make sure that you don’t make the same mistake as all the founders do, which is they go out there; they say that they’re raising money; then, three months after, they’re still crickets.
With that being said, you really want to make sure that you understand that the people that you’re putting on that target list are people that you’re researching on websites like Crunchbase, PitchBook, or Mattermark, where essentially, they are able, or you come to the realization that those people that you’re putting on your target list are people that fit with you financing cycle, meaning if they are investing in a seed round, and you’re at a seed round, or they are investing in a Series A, and you’re at a Series A, that is supercritical.
You don’t want to go to people that are investing much later in the lifecycle of a business. Also, you want to make sure to go out to people that are investing in your location. Then, also, to people that are investing in your segment. For example, if you’re operating in healthcare, you’re not going to go to someone who is investing in fintech.
The types of investors that you are going to add to your list is going to depend on where you’re at with your business. The types of investors that you’re going to go after are going to be the following:
-Friends and Family -Angel Investors -Angel Groups -Venture Capital Firms -Private Equity Firms -Family Offices -Corporate Investors
The next thing is, you want to take a look at their personality and also their vision. You want to go after people that are excited about your space, excited about your segment, and that have actively, perhaps, spoken on a press, on interviews, and things like that as to how incredible of, perhaps, market growth your segment is going to be experiencing over the course of the next few years. Go for people that have that excitement. Go for people that are already educated enough in your business or in your market so that you’re not wasting time educating someone that is a newbie. I think this will help you with reducing time.
Next is the timeline. The last thing that you want is that you’re targeting investors – let’s say it could be funds, venture capital firms, or private equity firms – that are still in fundraising mode. You do not want to waste your time for those because essentially, they’re going to be using you as part of their fundraising efforts, and they don’t have dry powder, in this case, money, to invest in your business, and you want to optimize for time.
When you’re either doing the research or even if you have that first call with the investor, make sure that you ask them: 1) How big is their fund? 2) How much have they already allocated of their funds? Those types of questions are going to help you understand whether they are ready at this point and time to invest in your business or not. If they’re not, then you move on to the next investor.
