The video discusses how to research and identify potential investors for your startup, emphasizing criteria such as investment focus, stage, and geographic location. It also mentions resources like Crunchbase for creating a target list of investors.
What this video covers
When it comes to the research, what you want to look at is, who are those investors that are:
The last thing that you want is to spend time with those that don't have the capital.
You can also use websites like Crunchbase, PitchBook, Mattermark, you name it, to take a look at who those investors are. You can filter things nicely on the advance search that those websites have to come up with a target list of about 100 investors that you think could be a very good fit.
At a seed stage, it's all about the prototype, the future, and the founding team. At a Series A, it's all about the leadership team, the fact that you have a revenue that is already validated. So it's a completely different type of profile.
What you want to make sure that you do is never, never, ever reach out directly via cold email, via cold message on LinkedIn, or grabbing the phone and calling this investor directly because that's a big no-no.
In some instances, what you're going to find is that more cold emails, more cold messages may lead to more meetings, but more meetings are not going to lead to more money because ultimately, those investors for a living, they meet with entrepreneurs.
What separates the ones that are just skimming through to the ones that they're actually investing some time is when there is a trustworthy source that is making that introduction.
So for that reason, the best source for making introductions is the founders of portfolio companies of those investors, people that have received money, or investors from these investors that you're looking to talk target in the last 6 to 12 months.
Ideally, those guys or those gals are already working at a board-level with that investor. They've been able to operate in good times, in bad times, in ugly times, and that trust is already built.
So you want to get into that circle of trust and get the right source to get you in the door. The best way to do that is, for example, if you have a list of 100 investors, maybe what you do is grab two to three founders that have received an investment from that specific investor that you're looking to target in the last 6 to 12 months and using those as the source to get your foot in the door.
Now, the way that you go about that is you're going to reach out to the founder. You're going to go out for a coffee, you're going to have a meeting, or maybe you're going to have a call. You tell them what you're doing, and basically, you ask for feedback.
Toward the end, maybe what you say is, "Hey, would you mind making an introduction to this individual? We'd love to get their feedback. They're going to say, "Yes." They're going to say yes, for the most part, for two very important reasons.
How do they add value to their investors? How do they stay on the safe side, on the positive side? Basically, they introduce to other founders that may be a good fit with the portfolio of that investor with their investment thesis.
So, for that specific reason, you are literally making that founder of that portfolio company look very nice and look very good toward their investors, and also increasing the chances of perhaps getting an investment, a re-investment, or a subsequent round from that investor later on.
- Investing in your segment, in your category.
- Investing at the life cycle in which your business is currently at.
- Who are those investors that are right now actively investing in your geographic location and that also have been actively investing in the last 6 to 12 months so that you're getting in front of people that really have the ammunition and that are ready to make investments right now?
- Founders are all about paying it forward. They were there where you are now back then in the past.
- The most important is we all, as human beings, have some form of a selfish component in one way or another. Obviously, for founders, support for their companies, they are going to require more money from their investors in the next 18 to 24 months.
