Every Startup Need the Right Investors

Some startups are able to bootstrap their way to success, but the more common solution is to raise funds from outside investors. In this page we’ll give you an overview of the different types of investors that are out there. We’ll also explain how to search for the right investor for your startup, and give you access to our comprehensive investors database so you can find the investor that’s right for you.

Types of Investors

There are many types of investors. They can be distinguish by the usual round their investing in (which can reflect their risk tolerance), their check sizes, the industries they invest in, and many other characteristics. But the most common investors classes are:

Accredited Investor
This is an SEC (or any local similar bureau) definition that define the minimal requirements from an individual to be able to invest in private companies. In the U.S. for example it’s: An individual must have a net worth of at least $1 million (excluding the value of their primary residence) or have had an income of at least $200,000 (or $300,000 for married couples) for the past two years, with the expectation of earning the same or higher income in the current year.

Angel Investor
An individual, investing his own money. This type of investor usually invest in the earlier stages of a startup and usually put in a relative smaller check size. The Angel Investor usually invest faster, has a higher risk tolerance and works based in feelings and trust (please keep in mind that these are general descriptions, and each person operate a little different).

Super Angel
Still an individual investing his own money, but one that makes more investments per year and is able to write larger checks. Due to their experience, Super Angels usually invest more systematically and has more processes and filters that help them make their investments decisions.

Accelerator / Incubator Programs
These are programs (typically 3-6 months long) where a startup which qualify goes through an intensive acceleration (hence the name) process designed to help early stage startups grow. There are specific accelerators based on geography, industry, stage, inclusion etc. Each program has its own rules and guidelines. Most will give a small check and take 7-8% equity (may differ between programs). 

Micro VCs
This is the first class of professional investors. They invest out of a money pool raised from other investors (called LPs or Limited Partners). This type of investor should have strict processes for investment decisions and a structured due diligence process. They are called Micro since the fund size is relatively small, which means they tend to invest in earlier stages and write smaller checks.

VCs (Venture Capitalists)
These are the professionals when it comes to startup investments. They have teams of people working for them and they invest funds they raise themselves from LPs (just like their micro version). Each fund have a structured due diligence process, investment committees, general partners, regular partners and even analysts. They are the ones putting in the larger checks, usually investing in the growth stages.

Corporate VCs (or CVCs)
Similar the the previous VCs, these are professional organizations that invest in startups. The difference between the two is the source of the funds (which determine their investment criteria and other decisions). The CVC is usually funded by a single corporation making their investment focus on startups that can add value to the corporation.

Family Offices
This is another class of professional investors. A family office is usually funded by a single (or a small number) of wealthy families, managing their private money.

Fund of Funds
These are the whales of the investment industry. They don’t invest directly in startups, they take on the role of LPs in smaller funds.

Institutional Investors
These are the large pension funds, universities and other large pool of public money managers who allocate a portion of their portfolio to high-risk investments like being LPs for other VCs.

What to look for when searching for Investors

Now that you understand the different type of investors it’s time to talk about the criteria a startup should look for when searching for investors

Stage of Interest

What stages of a startup’s life cycle does he invest in

Average Check Size

What is the average check size this investor is willing to put

Industry

What industry does the investor like to invest in

Fund’s Age

How long ago did the investor raise his last fund

Existing Portfolio

Investors will rarely invest in competitors

Experience

How many investments did this investor do

Leader/Follower

Does this investor lead rounds or follow other investors

Level of Involvement

How involved is the investor in the day to day of his portfolio companies. Is he easy of head to work with

Added Value

What added value does the investor brings to the table

When you research for potential investors keep in mind the above criteria and try to define the right type of investor you are looking for. Doing so will focus your search and improve your fund raising performance.

How to reach investors

A smart man once said that there is no second chance for a first impression, which is why the way you approach an investor will have a great impact on the chances you have for getting funded by that investor.

This apply to the entire context of the approach. How you approach, what do you say, what information you present, how you present it, who made the connection etc.

We’ve compiled a list of recommendations to help you on your fundraising efforts.

  • Always search for a warm intro
    The best intro is a warm intro, and if possible, from a portfolio founder or another investor (who also invested in you, otherwise a good reason why he didn’t invest is needed).
  • Have a good reason why you choose that investor
    Every investor like to feel relevant and know that you have done your homework and came prepared. This start by you having an idea on how can this specific investor can help you (other than money of course)
  • Know your numbers
    Knowing your numbers, of your business and your industry is a great start to showing you are a person worth doing business with.
  • Know your industry
    If the investor you approach knows more about your industry than you do you probably won’t raise money from him
  • Will you be able to consult with him when thing goes south?
    Investors want the business to succeed, but every startup has bad days. If you don’t feel like this investor is a person you can go to for advice when times are bad, don’t work with him…
  • Always look for added value
    Money is actually not so hard to find, but good advise is… You want to be able to get a lot more value from an investor than money. It can be advise, connections, services, industry knowledge, expertise etc.

Where to find investors

If you got till here, you’re probably dying to know where to find investors. And luckily for you, we got you covered. Below you can find our comprehensive investors database which you can use to search for the right investor for your startup (it’s a very wide table so best viewed on a PC. There’s also a scroll at its bottom).