Table of Contents
Understand Different Investment Options
You should be aware of the options in the types of investments. There are two main categories of investors: institutional and private.
One form of an institutional investor is Private Equity (PE). It is composed of funds and investors that directly invest in private companies or engage in buyouts of public companies. They are investors that target larger and more mature companies of at least $10mm USD EBITDA or higher. Venture Capital (VC) is another form of an institutional investor that provides capital to startup companies and small businesses that seem to have typically outsized growth potential. It generally comes from well-off investors, investment banks and other financial institutions.
One form of private investors are Angel Investors. These are high net worth individuals who provide financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company.
Involvement of Investors
How involved do you want your investors to be? Questions you could ask to gauge how involved investors want to be include:
What were your most recent investments?
What do you typically provide to the companies you invest in?
What are your expectations of the CEO’s you invest in?
How involved would you like to be?
These questions can help you pick the investors that will be the right fit.
The Right Place, at the Right Time
It’s important to understand the level of investor you would like for the stage of development you are in. You don’t want to lose time by trying to find investors who don’t necessarily have the funds available to invest in you. You also don’t want to be pressured when an investor isn’t doing well financially but is still trying to invest.
Right Fit for Your Brand and Culture
You always want to make sure that investors are a great fit for your brand and company culture, this means there is a higher chance of them being on board with your ideas. It will also be easier to get along with them if they have the same values and morals as you.
Know Where to Look
You will need to know how to connect with an investor. The top places where you can meet investors are networking events, hackathons and competitions, community organizations, networking platforms like LinkedIn, and mutual contacts.
In short, finding investors isn’t all about finding who has money. It is about who can add value to your business. Investors can provide you with their experiences and knowledge to give you new insights.