Just watched an ‘Entrepreneur Elevator Pitch’ episode, and it got me thinking- choosing the right investor is like a crossroads where you need to weigh their capital against their experience and network.
In the episode, K. Rocco Shields, founder of Genius Academy (which uses AI learning simulations to teach the next generation of mental health practitioners), faces what is considered to be a good problem to have: two investors battling for their business.
Note: Genius Academy’s valuation is $ 10 million.
Kim Perell, a serial entrepreneur and CEO of 100.co, offers more money, while Marc Randolph, Co-founder and first CEO of Netflix, brings more experience to the table.
Who do Shields opt for? That’s for you to find out from the show. 😉
This episode challenges the common perception of investors as mere financial backers. But there’s more to it than money.
As Emilien Eychenne, Co-founder and CRO at Adikteev mentioned in my first podcast “Investing in startups is a lot more than just buying “stock” in a company.” On the contrary, backing startups is not a “set and forget” strategy.
Start-up founders and CEOs could mistakenly place more focus on the money raised, and their companies before securing investments rather than on the value that each investor can bring to the table.
Now, I am not advocating that all the money in a startup should be “active” in the sense of bringing additional benefits beyond the funds themselves. However, in the competitive landscape of seed or Series A funding, having an investor who contributes more than just capital can be a crucial advantage.
Meet some Investors 🫲🏽
First, decide what support you need beyond the financial. It will benefit you further down the road. It might be tempting to take the first offer you receive, but DON’T!”
Engage with various investors, and you’ll gradually see the following benefits or in the poker language “Table Stakes” some of them can bring to the table:
1. Marketing Sales and Partnerships
Investors can help you expand your network by introducing you to potential customers and partners. They can share insights on market trends, and customer buying patterns, and help in developing effective marketing and sales strategies.
Aside from this, they can also provide opportunities for your brand exposure through events, social media, and PR.
2. Product Development
They can offer practical advice, especially if they have experience as operators. They can engage in discussions about MVPs, provide feedback on product priorities, and offer strategic insights into product roadmaps.
3. People and Organizational Development
Investors can guide you in building effective teams, tackling team challenges, and most importantly give some personal development tips.
4. Financial Management
They can offer advice on budget management, navigating financial challenges, and preparing for future financing rounds.
5. Industry Experts and Mentors
Investors can connect you with industry professionals who can offer mentorship, advice, and insights specific to your business.
And to circle back to your main concern, they can help you with future fundraising efforts by introducing you to other potential investors for additional capital and support.
Concluding Thoughts
Jason Seats, CIO of TechStars, offers an interesting perspective and I think this could be a hack around meeting the right investor from the start.