When you go out looking for money, a lot of people will say, “I need to have a list of everybody I know and everybody you know that has money and let’s go meet with them and ask them if they’ll put money in our deal.” That’s not really the right way to go about it. Instead. you should think about who the people who are most likely to invest in this deal are. The first level is people who are strategic investors, who are looking for more than just the investment return. People who are involved in your channels of distribution, people who have another product for you to put into the channel, people who are going to use your product for what they do, people who already know the market and say this is exciting and have had substantial experience in the marketplace. The second piece is who else would be interested in this. When you get a startup, it starts with friends and family. Then it goes to angel investors and then to private investors, to private syndicators, and eventually to early-on investment bankers. You’ve got to choose the people who are most likely to invest in your deal and who will understand something about what you’re doing so that you don’t have to teach them about everything.
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