How to find the right VC investor for your capital raise
You: A startup or early stage company with huge growth potential.
You’re ready to raise your first round of funding so you can accelerate your development and really get things off the ground.
What you need is a venture capital investor – but where do you start? We had some great advice from our expert speaker panel at the first Readiness Series event in Sydney this week.
1. Create an investor persona
Start by being certain about the type of investor that would be the best fit for your company – and the job at hand. Until you know what ideal looks like, you’ll struggle to find what you’re looking for. Define an investor persona, similar to the customer personas you would use for your company’s marketing strategy.
Ben Williamson, co-founder of dealPad says, “the most important thing is to know who you are looking for and what their key motivations are.”
2. Do your research
Use your persona to and look for investment banks that fit your criteria and create a list of potential targets to reach out to, and go to key industry events where you know they’ll be in attendance. Leverage your networks for any connections and influencers that can help you reach out to them.
Samantha Wong, Partner of Blackbird Ventures, says that networking between founders is crucial. “Relationships compound when you connect through portfolios – that’s where you’ll get introductions to the best VCs,” she says.
3. Seek to attract people, not dollars
Looking for investment is not just about taking money from whoever is willing to invest. The investors need to bring more to the table, including their connections and insights. You’ll be spending a solid amount of time with them; at least 5-6 months or more. For the best outcome, they should be treated as team members. You need to get along with these people and feel that they have your back – you’re all on the same side, after all.
A good investor will have:
- Several years’ experience in capital raising
- A strong knowledge and understanding of your industry & business
- Compatibility with your organization’s values & culture
Richard Kimber, CEO and founder of Daisee, says that the balance of investors is also important, which is why he looks at who will go well with who. “Sometimes the board can take too much attention away from the company,” he says.
4. Put them to the test
Linda Jenkinson, serial entrepreneur and owner of The Factory compares the process to Survivor, where you put your investors through a set of actions to find out who really has strong character and integrity. You need to know that your investor of choice will stick it out during the bad as well as the good.
“You might have a swanky ‘I’m worth a mill’ investor who never shows up for board meetings,” says Linda. “I’d make them shear a sheep – see if they’ll really be there in the tough times.”
Samantha Wong of Blackbird Ventures agrees, and recommends carefully examining their portfolios. “The true test of an investor is how they behave when things go wrong. Having a cool head at the table – someone who’ll support you during that period – is rarer than you imagine.”
Download Capital raising: A practical guide for everything you need to know about getting ready to raise money for your business.