Startups Blog

A Guide for Startup Investors: How to Find the Right Company

With so many different spheres and so many innovations constantly emerging, it’s hard to know what to invest in. Thankfully, there are more tools to help you with that than ever before. So here’s our quick guide on how to find startups to invest in that fit well with your needs.

woman-1

Don’t Get Blinded by Figures

When first starting in startups investment, it is easy to focus on the bigger figures. However, some experienced investors, such as Fred Wilson, advise that you do too much homework. Wilson explains that, for example, you should consider balancing team ethic and product quality, too.

Therefore, while good turnover and target hitting are very appealing, they don’t tell the whole story. It can take time for ventures to get up to speed and up to revenue. Therefore, go with your gut instinct - consider a team that shows genuine passion and promise.

Value Transparency

A fledgling company willing to acknowledge its strengths and flaws is likely to be easy to work with. While many innovators lead with a pack leader mentality, humility can go a long way.

As an investor, you should look for founders who lay everything down flat—ones that provide success stories and acknowledge challenges. What you should look for here, too, is a company willing to see challenges as minor setbacks. Positivity, and the passion to pivot, are enormously appealing traits.

Consider Maturity

There is no harm in showing interest or in funding a fledgling innovator. Ultimately, all businesses start somewhere. However, as an investor, you must prepare budgeting for company maturity. Where are your prospective innovators right now on their five-year plan?

If they are scaling up lines and entering new markets, you can expect minimal funding for a short-term return. The earlier in their journey you invest, however, the more they will need your capital. A company lacking in maturity will need that backing to really start selling its products.

There is an admirable risk in taking a maverick approach to funding a new idea before products even appear. However, you must be prepared to delay seeing returns, if at all, when taking these risks.

Look For Pre-Funded Startups 

Of course, ventures already funded to some extent will offer maximum confidence. Whether through self-funding or through initial VC outreach, a company that has some backing is making tracks. Investors buying into these companies will likely have a clear picture of where things may lead very shortly post-funding.

Those investors keen to catch companies in their embryonic stages may see post-funding as a route with measurable risk. But, again, you must make sure you can bankroll this risk - it’s vital to do your research.

Unlimited Innovation

Inspiringly, there is no shortage of innovation across the US.

If you consider investing in startups, a great place to start may be finding pre-invested firms through Fundz. Then, consider your own risk and capital - and you may see growth before you know it.

SOURCES

https://www.boardofinnovation.com/blog/startup-investment-guide-10-steps-to-assess-whether-a-venture-is-suitable-for-investment/

https://about.crunchbase.com/blog/how-to-find-startups-to-invest-in/

https://www.entrepreneur.com/article/250895

https://republic.co/blog/investor-education/how-do-i-pick-startups-to-invest-in

https://www.valuer.ai/blog/8-ways-find-startups-to-invest