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A founder’s guide to choosing the right investor
- Choosing the right investor for your business is critical, so founders must ask the right questions regarding who they are getting involved with.
- First, founders need to understand whether the investor's philosophy aligns with their plans for their business. They should therefore examine the investment firm's website and find answers to basic questions such as the target sector, preferred stage, geographical focus and average cheque size.
- Once these key questions have been answered, founders should then consider more detailed aspects of the investment philosophy by having a conversation with a member of the investment team.
- Background research is also critical to finding the right investor. Founders should dig deep into the investor's portfolio, ask for references, and check online coverage, such as in Landscape and Glassdoor, and news coverage.
- Investors can be broadly defined as seeking one-off, high-risk single opportunities that can turbocharge growth and make substantial returns or steadier returns across the portfolio.
- Trust is crucial to the relationship between founders and investors. Founders must trust that the investor will always be honest and open, and investors must trust founders that they will be open to questions and advice.
- Empathy is equally important. Founders and investors must be able to understand each other's goals, and see their potential for growth in the same way, to ensure there is mutual success in the future.
- In summary, getting along well with an investor is key to having an investor-founder relationship that is successful. Founders should learn more about their potential investors, what they are looking for, and if the fit is right for them.
- If you would like more information about the investor-founder relationship or would like to learn more about fundraising, contact Luke Williams.
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