Do you know any investors?
Yes. Yes I do. So do you!
Almost every time I finish talking to an individual founder or a group of early stage entrepreneurs, I am asked, “Do you know any investors?” Of course I do. Investors are part of my life. And they are part of your life, too! The trick is learning how to recognize them and connect to them in a meaningful way.
Recognizing Startup Investors:
Most of them look like people… because they are. These are individuals with extra cash to deploy, hopefully in your direction. The others are organizations like investor clubs, angel investor groups and venture capitalists, also with extra cash to deploy, hopefully in your direction.
Below are a few differences between Individual Investors and Investor Clubs and how you can stay on track with both. In my next post, we will talk about Angel Investor Groups and Venture Capitalists.
They are individuals just like you. People who have hopes, dreams, goals, expertise in a specific field, and experiences that make them interesting. The difference that you are looking for is that they may have more disposable cash than you do. That extra cash makes them ideal investor prospects. However, if we forget that they are real people, the relationship gets awkward.
Tip: Stay focused on treating Investors just like you would want to be treated if the roles were reversed. Don’t be a professional beggar. It’s not who you are and it’s not who they want to hang out with. Be you. Let them be them. Let the investment be a natural byproduct of your mutually beneficial relationship.
These are like very serious book clubs, but instead of books they study businesses as a group, and once they find a business they like, they invest as a group or occasionally as individuals if the group cannot agree. Most of the investment club members are not professional business analysts any more than most book club members are professional authors. These are investor hobbyists.
Tip: Your approach to these groups will typically be via an individual group member that brings your business to the attention of the group. As always, your personal relationship matters here. However, these groups typically get more analytical and ask for way more details than your average individual investor. Be prepared to present your data truthfully and diligently. Also expect some seemly random data requests. One of the best parts about Investor Clubs is that they are not professionals, consequently they think of really random, creative and insightful questions. Answering their questions will often make you and your business more likely to succeed.
No matter what type of investor you are talking to, relationships are SO important. Know real people, listen to real people and make connections that are mutually beneficial with real people.
See you in the next post where we can talk about Angel Investor groups and Venture Capitalists.