Fundraising Best Practices: Identifying Investors
Two best practices for identifying potential investors for a startup are getting a solid intro to potential investors through social media platforms such as LinkedIn, Facebook, and Twitter and getting third-party feedback by creating a connection with the CEO of a company that the investor is currently connected to.
1. Get Third-Party Feedback
- According to Tech Entrepreneur and Investor, the most successful access point to an investor is obtaining third-party views on what it is like to collaborate with them. Are they typically active or inactive? Do they comprehend the possible risks associated with the investment?
- The best way to get this viewpoint is to establish a link with the CEO of company that is currently connected to the investor. A few interactions with them will provide a clear picture of the investor.
- An article published by Entrepreneur states, "If the investor has a limited history of investments, service providers, like lawyers or accountants, can also be terrific sources to tap into."
- Regarding potential investors, one must study their latest dealings and the potential services they could provide. Furthermore, the expectations they reserve for business leaders should be considered, along with their level of involvement in company operations.
Why It's a Best Practice
- It gives more insights into the investor before one can make an informed decision on whether to solicit for funds from them or not.
2. Get Solid Intros to Investors Through Social Media Platforms
- Success in business and fundraising is all about visibility, getting noticed by the right investors, who one knows, and who knows them. This can be achieved by going through social media platforms and databases such as Crunchbase.
- The following are the most prominent social media channels and ways to utilize them:
- LinkedIn can be used for cold messages or looking for "introductions to pass the social proof with guarded investors such as Venture Capital investors." LinkedIn Premium is useful for unlocking certain features.
- Facebook is for maintaining a connection following the initial meeting with an investor, as it is essential to establish a relationship to create trust.
- Meanwhile, Twitter is for mindful discussions and engagement with suitable data bestowed by the investor.
Why It's a Best Practice
- This will help in understanding what the investor is ready to offer such as the potential services they could offer, the funding amount of their latest dealings, the expectations they reserve for business leaders, and their level of involvement in company operations.
The two practices were among the ones listed by most websites in their top ten or five practices, including Forbes, which is a renowned website.