The 7 types of Investors you will face

2018-10-03T12:30:09+00:00Startup resources|

Some entrepreneurs start their business without external help or capital. This is called Bootstrapping. Such startups finance the development of their company through internal cash flow and are careful with their expenses. While very few get lucky and self-start their business with little or no external input, most startups look for investments. As any company progresses along the way, it will need external aid.

Entrepreneurs who are hungry to raise funds are certain to meet different types of investors who are unique players in the growth of a firm. The level and quality of their involvement can ultimately help determine a company’s success or failure. Here are a few kinds of investors to watch out for, to pass, and to persuade.

1. The Non-Tech Investor

This group of investors may not completely understand the technology underlying your idea but have their say about your business model, market, and your product. Their opinions and hypotheses from past experiences might be contradicting at times. The best way to avoid conflict of minds is to change the conversations and talk facts and make sure that your value proposition is clearly communicated. Try to encourage questions during the presentation and keep everyone engaged instead of waiting till the end. You can also consider carrying a physical prototype which would be a very effective way of ensuring your idea isn’t lost in translation.

2. The Indigent Investor

These investors are those whose experiences with previous ventures were not fruitful or they poured their wealth into an upcoming sensation. Either case, they are likely not to have money to invest in you. However, they’re interested to see what’s around the corner in the market. Always remember that the immediate goal for your pitch deck is not to raise money but to build contacts and further the discussion. These investors might not help you with finances but there is a chance that your idea will spread in the investor community. Just be aware that they have no plans of investing in you at the moment so avoid wasting too much time.

3. The Enquirer

These investors want to know minute details of your project and demand clarity about your future. A realistic forecast of how your business will look five years down the line is an expected question but having all the tiny details of the future which you can’t see is difficult. As a startup, you will face a lot of challenges initially and that is how you will learn and grow. You can explain to the investor how you plan to get to there in five years but try to stay away from small details.

4. The Sheep Investor

It is worth maintaining a good relationship with these investors. Their feedback and advice could help you potentially. However, they want other types of investors to invest in you before putting their bet. You can find out in detail of their insecurity and clarify their doubts if any. You can look out for few Angles whilst maintaining a strong relationship with these investors. It will certainly be useful for you in the future.

5. The Helpful Investor

Finding a helpful investor is like having a Good Samaritan knock on your door. They’re extremely helpful. Before investing, they will want to see how your business is performing. If someone with experience in your market pointed a flaw in your business, you can fix it and prevent wasting money. Maintain a good relationship with this type of investor and consider their advice to grow your startup.

6. The Greedy Investor

These investors might ask for more equity than initially proposed. There’s nothing wrong in negotiating but take your time before signing deals and ask for a proper explanation of how they reached that particular number. Look closely at your value proposition and see if you can make any changes which will help you gain higher valuation. Seek advice from experts in the market and defend your offer. Keep your options open and see what others are prepared to offer you before signing the first investor.

7. The Doubtful Investor

These investors are interested in your idea but doubt your potential as a founder. Rise about their views instead of getting angry and find out if any concerns are to be addressed. If their problems are endless, don’t take it too personally. Carry on finding an alternative and probably a more suitable type of investor.

Don’t get discouraged if investors turn you down. They meet many startups but invest only in a few. Feedback and advice are the most important things to be taken back after a pitch session. However, an opportunity to sell yourself doesn’t come your way very often and you can’t afford to lose it.

Source: Medium

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