Meeting and engaging with investors who may not ultimately invest can be a frustrating ordeal. Trust me, I’ve been fortunate enough to experience that a few times.
Here are some quick tips to help you create your targeting strategy:
- Categorise your investor lists
The difficulty is in knowing who is the right type of investor for your company. There are many generalist VC firms and you can end up taking countless meetings, but not get any closer to closing your round.
Conducting your research ahead of your outreach work will be the best investment of your time. Research, categorise and list out all the VCs that are:
- Relevant to your sector
- Relevant to your stage of funding
- Relevant to the size of investment you are seeking
Not all VCs are created equal. Conduct thorough research to identify venture capital firms aligned with your industry, stage, and vision. Look into their portfolio companies, investment focus, and the industries they’ve previously invested in to find the best match. It is useful to know that investors have different policies on investing into competitive companies in their portfolio.
- Build a stakeholder map
There are multiple purposes and functions for this. But ideally you are looking to:
- Research the right people to target within those firms
- Build a map of who can get you those introductions
- Understand the key players, 3rd parties that can be helpful in engaging with the right networks to open up access to the right people
Your stakeholder map should have identified who you already know that could connect you to your target investor. It should also help to identify the gaps in your network and the relationships you need to build over time to help you in building the right networks and relationships.
- A concentric approach to investor outreach
Now that you have a target list of investors, you should be strategic about the order in which you approach them. If you’re just starting your fundraising journey, the obvious answer may be to approach the investors that are the most suited to your type of business and the ones that are highly likely to invest. I would actually recommend the opposite (if time allows). More on this in the next blog.
One of the more difficult things to find out is who is actively making investments. Each VC fund is at a different stage of deployment and therefore just because they may take meetings now, does not mean they have ready funds to invest. Leave plenty of time and prepare well.