Raising funds for a startup is one of the most important and challenging tasks, an entrepreneur faces. As startup founders, some have the choice of picking investors while some look for anyone who can make the investment.
Upon reaching out to a number of investors, entrepreneurs and startup founders regarding their views on the attributes they look for in an investor, we observed that the following 8 qualities popped up more frequently than the rest:
Investors should have a credible brand name so that it gives more confidence to future investors also. At all stages of engagement between investor and startup founders, trust lays the foundation and goes a long way in strengthening the bond between them.
2. Well Connected
Since investors will be holding equity in a startup it is important that they are well connected with the community of other investors and entrepreneurs who know the field and can bring other investors, talent, and opportunities for the startup, helping it moving ahead. Also, their personal connections will help a startup in getting connected with the right people, which might be difficult for the founders themselves.
3. Entrepreneurial Spirit
The relationship between investor and startup founders has to be close knitted. If an investor can’t wear the hat of an entrepreneur, she/he would never be able to get the world of founders. So it is preferable that an investor has some experience in either starting up or has worked with a lot of startups in their career.
4. Domain Knowledge
It would be great if startup founders could find an investor who has knowledge in the same space as their business. He could be a great mentor to the founders.
The investors should be strategic and straightforward who can advise on product, company building, financing; and also support in areas where founders may not have core strengths.
6. Puts Faith in the Team
The investor needs to have complete trust in the startup’s team abilities to execute and win. It’s important that the investor is comfortable with all the team and not be choosy about just a few (else this creates an environment of mistrust and negativity between the founders).
7. Compatible and Has a Shared Vision
Founders mainly looking for an investor who believe in their vision and allow them to execute that vision without getting in their way. They want someone who in addition to capital, is willing to offer space, time, and freedom for a startup to build on their vision.
Startups come across a variety of situations in their path towards their goal and not all these situations can be managed by regular handling of the founders. A resourceful investor is always a huge help in making that extra phone call, connecting to some experts or even being available for a startup at 2 am in the morning should need arise – to crawl out of these situations.