Tag Archives: Investor Strategy for Startups

Investor Strategy for Startups

An Investor Strategy for Startups is key for new ventures.  It is required as a part of your fundraising.

Investor Strategy for Startups

Your Investor Strategy is an internal document that guides the co-founders (and later the officers) of a startup in:

  • Determining which Financial Exits are acceptable to you and therefore must be acceptable to Investors and must be reflected in Term Sheets
  • Understanding which types of funding are appropriate for your new revenue stream, startup, or etc.  These types might include:
    • Investment by friends and family.  This group is referred to by some as friends, family and fools (FFF).
    • Angel / seed stage investors
    • Financial venture capital investors
    • Strategic corporate venture capital investors
    • Factoring receivables (obtaining a loan from a bank based on a purchase order from a customer)
    • Bank loans
    • Government subsidies and/or grants
    • Crowdfunding
  • If (for example) your choice is traditional angel/venture capital, then this document helps you to determine which potential investors are most suitable for your particular startup, SME/SMB, new revenue stream, etc. during this particular fund raising.  As one consideration, some traditional angel/venture capital investors will not invest in a startup which has previously received investment from investors that the traditional investor perceives as non-professional investors.
  • The Business Plan and type of Financial Exit imply how much investment must be raised.  A particular investor will typically make investments in particular size ranges for specific levels of corporate maturity
  • Creating any unique aspects to your Sales Kit for use in this fund raising
  • Deciding which information to provide to potential investors in meeting #1 and which to hold back for disclosure in a later meeting after the investor is qualified.  This can be a difficult issue as some investors will not be pleased when a startup tries to defer answering a question.

Conclusion

Many startups neglect development of an Investor Strategy.  This can really hurt them during fundraising.

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