Strategies for Selecting Suitable Guardian Spirits
In the dynamic world of startups, securing the right investment can be a critical factor in a company's success. Jeffrey Eschbach, a clinical assistant professor of strategy at the Kellogg School, emphasises the importance of building and leveraging relationships for fledgling companies seeking capital. Here are some tips, drawn from Eschbach's expertise and general knowledge of effective practices in angel investing, to help early-stage companies find the right investor.
Firstly, look for investors who have relevant industry experience or a deep understanding of your market. Their expertise can provide valuable guidance and connections beyond just providing capital. Assessing an investor's track record with early-stage companies is also crucial. Right angel investors often bring more than money—they contribute mentorship and strategic help.
Alignment of vision and values is another essential factor. Investors who share your startup’s mission and goals are more likely to provide constructive support and remain engaged through challenges. Choose investors who are willing to support founders with patience and realistic expectations about growth and timelines.
Leveraging networks and angel groups can also be beneficial. Finding investors who co-invest with others, sharing risk and adding collective expertise, can be a wise move for early-stage companies.
Starting conversations with potential investors by showing interest in their expertise, rather than just their funding, can help build relationships. Discussing financial expectations, including timelines and returns, is critical when meeting with potential investors. However, it's important to ensure investors understand the long horizons typical of startup investments and are comfortable with potential losses to prevent misaligned goals later.
Creating "intentional serendipity" by actively placing oneself in environments where potential investors congregate can help in meeting investors. Attending events and pitch competitions hosted by innovation hubs and local universities, volunteering at events organized by entrepreneurship organisations, and seeking out experienced funders who align with your vision and bring value beyond their cash are all effective strategies.
Preparation is crucial before reaching out to potential angel investors. This includes building a polished online presence for oneself and one’s business. Having a clear, one-page executive summary ready to share when funders request more information is important. A concise and compelling pitch deck tailored to various audiences should also be prepared.
Consistent email updates on business progress can help keep potential investors engaged and interested. The size of the funding request should be determined before an opportunity arises, as the amount requested carries many implications for investor expectations, milestones, and obligations.
If warning signs emerge during conversations with potential investors, it's often better to walk away. Advisors, mentors, startup professors, startup attorneys, other founders who have received funding, and contacts from customer discovery can provide valuable connections. Asking for feedback instead of money as a way to lower pressure and build trust with potential investors is another strategy recommended by Eschbach.
For more specific advice or quotes from Jeffrey Eschbach himself, checking interviews, articles, or content directly from Lofty Angels Summit or related Lofty Ventures programs, which emphasise early-stage investing knowledge and could feature insights from industry experts like Eschbach, would be advisable.
Investors with relevant industry experience or a deep understanding of your market can offer valuable guidance and connections beyond just providing capital. Furthermore, aligning your startup's vision and values with your potential investor can ensure constructive support and prevent misaligned goals.
