by Martijn Lentz
Finding an investor, is like getting into a relationship. It’s all about the right match. What are the 3 biggest reasons startups and investors don’t connect? Founders search for the right investor and investors are always on the lookout for that one big fish. A matter of 1+1=2, wouldn’t you say? To connect with investors, you need to know what makes them tick. You have to speak their language. Also, you need to understand that there are active and passive investors, and that every investor has their own investment scope.
What?!? The jargon of investors
A different language is difficult to understand, and that doesn’t only apply to languages and dialects. Startups and investors have a completely different understanding of the world. You want to succeed in life with your business, investors want return on investment (ROI). Not to mention other investment jargon, such as exit strategy, due diligence, multiples, escrow and IPOs. As a startup it makes a lot of sense to learn the basics of that jargon, to know what they are talking about, and to make a personal connection. So visit an investors meeting, take an online crash course or place yourself in the position of your future investor.
Active and passive investors
Investors come in different shapes and sizes: from very passive to very active. Whilst passive investors only commit capital and hardly get involved in the company, active investors prefer to sit in the driver’s seat. As a founder it can be hard to deal with someone who wants to be involved in day-to-day operations and have a say in decisions. So it’s essential to think about what you prefer, before you make a deal.
Investment scope and sector
Is your startup not in the same sector as your investor, then you are one point behind. Most investors have been or still are business owners themselves. They have expertise, experience and connections in a certain sector and want to invest in a business that closely resembles what they know to reap their strengths. Are you doing something different, than your proposal might be not for them. That does not have to be a dead end street. Many investors are connected. So if an investor likes your vision, he might bring you into contact with other investors.
Martijn Lentz is a KVK Entrepreneurial Financing Expert. During Amsterdam Capital Week 2018, he will post a short daily blog on ‘How to raise capital in five days’. Do you have any questions? Contact KVK’s Startup Information Desk 00 31 88 5852222, or e-mail firstname.lastname@example.org. You can find Dutch info on KVK.nl/startups.