by Vadim Lidich
Posted on October 2, 2018
Running a startup is an exhilarating experience! You get an opportunity to develop new product or solution that tackles a real world problem, and get a lot of customers really-really excited. Very few folks realize, however, that managing a startup company comes with certain responsibilities. One of those is to source funding to fuel growth, expand team, and acquire new customers. Let me explain.
Startup environment is highly competitive environment. Brilliant people come up with promising ideas all the time. But ideas alone are cheap. What differentiates winners from failures is execution: landing customers, expanding product pipeline, growing team. Speed of execution also matters. Early customers may tolerate scrappy prototype, but they won’t stick around forever waiting for your eventual vision to materialize. You become highly susceptible to competitive threats. Thus real businesses need to be optimized to either growth through cash flows, or by getting outside funding.
Depending on how much traction you have, you may try to attend local startup events, demo days, and conferences. Investors usually hang out there in constant search for good deals, and you might be able to break the ice by asking about their experience at the event before talking about your company. It seems more natural, too, as startups constantly pitch themselves - to their friends, their customers, investors, other startups, and especially investors.
If you are not very lucky in terms of coming across investors you want - i.e. you’ve met some of them, but they weren’t investing in your industry, or in the stage you’re at right now - you may try some of the search tools available out there.
Crunchbase - crunchbase has a lot of information pertaining to startups, including previous investment rounds and investors affiliated with the raise. If you know of any companies in the same industry as yours, it’s worth checking Crunchbase out for investors who have previously invested in the industry - and might be open more such opportunities. It’s a bit of a hustle to get their contact information though, but you might be lucky to connect with partners directly on LinkedIn and then reach out. Most of them will be open to startups approaching them with ideas.
Angelist - started as a curated list of angel investors for San Fran, it is now a directory of individuals and institutions that identify themselves as investors. You can search by investor name or an industry, and those fitting your criteria will come up. Their search is not very accurate - as it will give you investors residing all over the world, and investing simultaneously in quite a few unrelated industries. Yet it’s a good starting point, and you can connect with investors directly. Recently they’ve added syndicates to support investment rounds directly through the platform.
Airdyme - if you’re looking for smart-money investors, you can checkout Airdyme. It’s a platform that helps startups to identify and build relationships with investors who will add value beyond writing you a cheque - by providing advice, industry connections, and expertise. They will match you based on traction, investor experience, and fund availability - and you can take it off the platform to reach out and pitch your startup.
Watch out for the next article where I will be sharing creative strategies to get meetings with investors!