How to Find Your Perfect-Fit Investor

Dreamer founders spend 9 months trying to raise, and still don’t even succeed.

Versus Doer founders get it done in 3-4 months.

Doers are growing their businesses, executing faster and accelerating toward their next round.

…while the Dreamers are stuck in the muck, still struggling.

Here’s what the Doers understand, that the Dreamers just don’t get:

How fast you can raise capital is directly related to how much you focus on your Ideal Investor Profile.

Ideal Investor Profile is the same concept as your Ideal Customer Profile: Some will be a perfect fit, and grow alongside you forever.

Ignore this, and I promise you:

• Useless dead-end conversations
• “Yeah, this isn’t really our flavor”
• 200x+ followups “Hey, just wanted check in & see where you’re at”

…or the worst:

We took it to Investment Committee, and it’s just a bit of a stretch for our thesis

It’s up to you to know how to identify your Perfect-Fit Investor, and actively seek them and only them.

Here's how, step by step:

Step 1: Set your initial filters

Start with Geography & Industry:

• Geography: If you’re in Zimbabwe, and they only invest in the Southeastern US, it ain’t happening. For USA, narrow it down to region. The earlier the round, the closer to home VCs will tend to stay.
• Industry: This is a pretty hard criteria. If you’re in healthcare, and they invest in cybersecurity, that’s a non-starter. In almost all cases, a VC will have far less flexibility in its investment mandate than an individual investor.

Just because they invest in your state & your industry, doesn’t mean you’re a perfect fit yet.

Step 2: Dig deeper into that investor’s preferences

Often, investors will express their preferences as a function of:

• Stage: Pre-Seed, Seed, Series A, Series B, Growth, Later-Stage, pre-IPO, etc.
• Check Size: Target investment range, e.g. $1M-3M
• Other: Revenue or profitability milestones, leading vs. co-investing for example

You could be wasting your time if they don’t invest at your level.

A private equity fund that writes $100,000,000 checks is not going to be interested in [or allowed to do] a $5 million investment in a startup.

However, if you’re raising your Seed, you could still pre-pitch a Series A investor - as long as you do it right.

In most cases, Check Size should fit comfortably into your round, or make up the majority of it in the case of a potential lead investor.

Just don’t go too low on Check Size. One founder I spoke with had 160x shareholders at Seed stage. 160x conversation about “how’s business doing?”

Now it’s time for the next step.

Step 3: Look at the “…and what else”

Silent partners can be good, but your perfect investor should be able to add value to your business beyond just a check.

Other things you have to think about (and decide on):

• Family offices won’t push you to grow at all costs like a VC will, but won’t support you in the same way. Do you go after them?
• At least one of your large customers has a Corporate VC arm. Big distribution & early validation, but could be cumbersome. Does it make sense to take the extra time to go through their process?
• What could the right investor have a huge impact on in 5 minutes, that would add massive value to your business? What kind of investor is most likely to add that value?

Be open about the value you expect from incoming investors, and the reason why you’re being so intentional about stacking your cap table with value.

Those who want to be on your dream team will self-select.

It’s a quality game, not a numbers game

Remember, you don’t need 1,000 investors to write you a check. You don’t even need 100.

10-20 PERFECT FIT investors are more than enough.

Don’t drop your standards. Create your box thoughtfully and with long-term value generation in mind, and the right people will figure out a way to convince you they belong inside your box.

Now that you’re closer on defining your perfect-fit investor, next week we’ll cover getting investors to come to you.

Stay tuned!

(But first, go be a DOER.)