Entrepreneur’s Guide to Developing and Diligencing Your Target Investor List

Step 1: Broadly consider the sources of funding that are aligned with your vision to grow the company.

Many entrepreneurs, when they make the decision to raise funding, will default to seeking out angel or VC money. Before you do that, make sure to consider other, alternative sources: strategic investors, non-diliutive government funding, foundations, family offices, or funds with novel investment theses like Indie.vc (which invests in revenue-focused startups) or social impact missions.

Step 2: Generate a large list of potential investors

Start by casting a wide net. Identify those that invest in your industry, broadly defined. These are the investors who bring a value-add beyond the cash: connections and experience. Think high level at first — “life sciences”, “healthcare”, “enterprise tech” at this point rather than granular like “aging care”, “women’s health”, “data & analytics”.

  • Angellist — Free
  • Quora — Free (Search for “List of investors in X”)
  • LinkedIn — Free (Search “Venture Capital & Private Equity” industry)
  • Crunchbase Pro — $29/mo
  • CB Insights — $1599/mo
  • Pitchbook — Neogitable (~$15–20K/year)
  • Mattermark — $200–500/mo (Have heard they offer discounted pricing for pre-Series B companies)

Step 3: Cut that large list down to your target investor list

Now you want to cut down the list to 20–30 target firms where you fall into their sweet spot. Use a systematic method of triaging your initial list.

  1. Subsector Focus
    What thematic areas of focus is the investor looking at? Remember to go deep, as there are levels of specificity within industries. For example: Healthcare > Digital Health > Infrastructure.
  2. Stage Focus
    Does the investor focus on the size of investment you’re open to seeking
  3. Location Focus
    Does the investor invest only in specific geographic areas or have a demonstrated preference for a particular geographic area?
  4. Year of Fund in Its Lifespan
    Is the investor actively investing? VC funds will typically stop making new investments at year 5 of a 10-year fund. Depending on where the fund is within the lifespan there will be certain pressures or motivations. ADD IMAGE Source: 500 Startups
  5. Cultural fit
    Have they expressed an appreciation for diversity of thought? (See the Ultimate Guide to Finding Women Investors). Does the investor offer more than just cash? How involved or not to they tend to be in the company’s in which they invest?

Step 4: Getting access to your wish list

Circulate your target list again to a few trusted people to give you a reality check. Ask them if there there any obvious ones you missed, or ones you’ve included that they think would not be interested and why. See if they can make a warm intro to anyone on the list.

Other Resources:

I won’t pretend I’m the only one who has ever written on this subject. Here are a few others to devour:

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Joshua Henderson

Joshua Henderson

1000% committed to helping women innovators transform industries, cure diseases, and build scalable businesses