There are investors you know and investors you don’t know. There are good investors – in other words, good matches for you that bring you more than just financial value. And there are bad investors – in other words, investors that may not be such a good fit for where you want to take your company. How do you sort through all this? Do you even need to sort through it all? If there’s one thing I can advise against its jumping from one lily pad of funding to the next. Set your stake in the ground and go after what you need. On Worksheet I you began that process by declaring the amount of capital you require in this round – that forces you to look at the bigger picture of what you need to achieve a set of milestones. And now you can begin researching your ideal prospective investors on Worksheet II by going to our website and registering for free access to the NRP Vault.
Start the worksheet by describing the characteristics of your ideal investor. Do you want them to be familiar with your chosen markets? Do you want them to be able to introduce you to potential customers, potential industry partners, or potential co-investors? Do you want them to be a mentor? Do you only want the cash? How about patience – what kind of return expectations do they have? Take the time to think through things like this and work hard to render these characteristics down into a couple of lines. And keep a couple of lines reserved to describe why it makes logical sense to target them. Because they invest in companies or technologies related to yours? Because they don’t? Because they do deals at similar stages to where your company currently exists? Because they’re local? Because they’re not?
These are not necessarily difficult questions, but the process requires that you really think through your approach. Gather data, use all of your available knowledge and resources to identify potential investors. Read, read, read. Who’s actively investing in your local area, your region, your state? Who actively invests in deals your size in your market space? Get online – Crunchbase, for instance – and spend hours learning who is active in your space. Talk to people you know who have raised funding – what did they learn? Become an expert!
As you’ve gathered up that information, turn your attention to ranking the prospective investors by likelihood of gaining a meeting, having a discussion (pitching), and possibly investing. Feel free to use our “Investor Target Determination Rubric” tool to create the framework to view them.*
Ranking the prospects in this manner will allow you to target your efforts by thinking though the specific who (a person if its at a firm or a fund) and the specific how (who in your network can make a warm introduction; or how can you otherwise obtain a meeting). Fill out all of this information for your top 6 on the NRP Funding Strategy Worksheet II* and your plan will be one step closer to being ready.
*available free of charge when you register online for access to the NRP Vault on our website at www.nrpworldsos.com
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