One of the hottest topics on Startup Fundraising is what you can do to raise the odds of being funded whilst identifying what are the red flags that scare investors. As this is a long-term commitment and you’ll need much more than just somebody with a checkbook, you should also ask yourself: Why would I choose them?
We know it’s not easy to refuse offers from investors but don’t let your urge to get your idea off the ground make you strike a deal with the first investor that makes you an offer without thinking twice. Whilst some investors will help you others can make your life more difficult.
You should be aware of investors that don’t have real experience in building companies and who fire away opinions about everything and anything without giving enough thought to really understanding your project – “VC Seagulls” as Mark Suster calls them:
“They would swoop in for one day to check on things, shit on you and then fly away. Seagulls.”
We know you’re short of time so here are 3 tips that you can easily remember when the time comes to look for and choose an investor:
– What are you looking for? (beyond the money)
Define your Goals: in what area(s) of expertise do you need help, what kind of resources and contacts do you need, what are your biggest barriers and main challenges you face?
– What can their Portfolio tell you?
Do your homework and look for other startups funded by the investors you’re talking to. Not just the ones they show you, the “successful” ones, but all of them – try to reach out to some of the founders in order to understand the reasons behind a successful relationship or a troubled one.
– Are you on the same page? You’ll be seeing your investor more than your own shadow and both are things you can’t run away from, so ask yourself a few questions. Are they aligned with your vision, culture and interests? Do you see yourself working with somebody like them? What does your gut tell you? – You’ll need somebody you can trust, who advises you on a regular basis and that doesn’t turn their back on you during hard times.
Extra tip: Joining an accelerator can be an important step in your fundraising efforts. Not only can you test, validate and improve different aspects of your Startup, but you’re also able to grow your own network (remember it’s always better to be introduced to an investor by someone than cold emailing) and some of these programs have already done some of the filtering for you, offering you the chance to meet of the best investors in the ecosystem.
2nd Extra tip: If you want to get great insights on fundraising in a surprisingly informal and slightly unexpected startup conference, see what we’ve got planned and who the The Top Speakers and Investors you’ll meet at LIS Summit,
whilst the early bird price is in effect. Do you have any other tips to suggest? Share your doubts or past experiences.