In my last article, 3 Secrets to Pitching Investors, I covered some tips to keep in mind when you’re preparing your investor pitch. Not all investors are alike, however, and as great as it is to get that golden opportunity to pitch, you need be prepared to vet your investor if you’re going to score your own personal unicorn (a.k.a. the perfect investor).
Here are 7 traits to consider when you’re on the hunt.
Trait 1: Network
Having a well-connected investor on your team could allow you to unlock plenty of future capital and quickly establish valuable joint venture opportunities in a fell swoop. As yourself, is this investor part of a network that may be interested in investing in this round or the next? Does his or her network consist of target customers that you’re trying to reach? Is he or she part of a circle that’s rich with partnership opportunities?
Trait 2: Industry experience
Is this investor familiar with your industry? Getting an insider on your team could help you avoid making catastrophic mistakes in your business.
Trait 3: Business model experience
Does this investor have experience with your business model (e.g, subscription, freemium B2C, B2B)? Similar to “industry experience”, having an experienced person on the team allows you to find hidden opportunities for growth, gain an edge over your competition and avoid costly mistakes.
Trait 4: Functional expertise
Does this investor have functional expertise that he or she could use to help out the company temporarily? These could include project management, negotiation, or technical skills. Getting the investor to take on a role temporarily in the business could help you cut cost. Also, you can be certain that they’ll do their best since they’re invested — literally — in the business.
Trait 5: Geographical relevance
Is this investor in the same country or region as you or your customers? Getting in-person, hands-on help from investors could speed up progress. If your investor lives in the same place as your target customers, he or she could provide invaluable intel that you may otherwise have no access to.
Trait 6: Aligned views on “return”
Does this investor have an agenda that’s aligned with yours? Do they share the same values as you? Are they trying to make money or are they more interested in helping your business fulfill its mission? How fast are they expecting the return? These are all important factors to consider.
Trait 7: Easy to work with
How does this investor work with companies? Does he or she like to take on a more “lean in”, “heavy on the business” approach? Or do they like to be more of a “shadow”? Does their style align with the way you like to work? Ensuring that your investor’s preferred “style” of working is aligned with yours allow you to avoid friction in the relationship.
So these are the 7 traits of a “Unicorn” investor. By evaluating potential investors against this criteria, you can quickly identify your top candidates. Of course, Unicorns don’t really exist. If they meet 4-5 of these traits, they’re solid.
Looking for more support with raising your round?
Learn more about our Fundraising Roundtables
Meet with a group of entrepreneurs focused on raising their best round.
Get support from the best facilitators and a focus group of peers to access all the right resources, connections and experience to raise capital from your ideal investors.
Or check out our Online Fundraising Workshop to get started.
Chin Hing Chang, Head of Growth @ Spring
Chin mentors employees looking to start a new venture and non-profit organizations looking to spin out a for-profit venture. At Spring, he has helped our 450+ entrepreneurs launch over 230 companies. As a speaker, Chin focuses on ACTIONABLE advice and processes, not just the motivational fluff, and have presented at various conferences and companies including Protohack, PVCC, RED Academy, and many more.
