Talking to the right investors — don’t push the rock up hill!

One of the questions that I get often from entrepreneurs (especially those raising seed rounds) is to make introductions for them to investors, which I’m always happy to-do.  Making GOOD introductions is a key part of my strategy to helping the start-up ecosystem thrive, and hopefully helping great entrepreneurs get one step closer to the dream of building a really awesome company.

I always ask   founders who they want to meet and why — with the WHY being the most important question.  All to often, I get a laundry list of every guy in town (which generally constitutes the teams “strategy” of ask everyone with a pulse).   Personally, I think founders are wasting a shit load of time (which they typically don’t have) and energy (that could be dedicated to actually building the business) with this strategy — and frankly — showing that they’re strategic thinking skills are, well — non existent .   There should be a base of questions that a founder asks themselves about every potential investor — BEFORE they add them to the list of folks that they want to go after.  Here is my rank ordered checklist:

1) Where are the areas that I need the most help (generally also where I have gaps in the teams skills).  Who are the folks that are known experts in those areas?

2) Using the list above, do they invest in my space (hint: look at the investments already made)

3) Do they invest at my stage?  (not every institutional investor does seed deals, for instance).  Do they invest w/ my preferred deal type (convertible note –or– priced?).

3) Are there competitive or synergistic portfolio companies (hint:  investors love synergies among their portfolio).

4) How many investments has the firm/investor made?  Do they realistically have the time to spend working with me on my business? (remember – you’ll need more HELP than $$ to build a great company — pick folks that optimize on the help side).

5)Does the firm prefer to lead/follow?  Do I need a lead investor to get them excited?  Are they betting on my seed to take a stab at the next round?  (important to know, as  you’ll want to have some idea as to how fill out your dance card for a GREAT seed round and to tee you up for the series ‘A’).

End result — spend the time up front to pare down the list to the most relevant folks — and don’t waste your time running around town pitching to folks that aren’t a good fit — time matters and it’s better spent put towards your business.

 

This entry was posted in early stage. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s