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Finding the right investor for your startup

Any investor won't do. Here's what you should look for to get the best investor for your startup.
May 21, 2024
5 min

Months of hard work and execution have finally paid off—your startup is thriving with robust numbers and impressive MoM growth.

You know what's coming. It's time to show off your numbers and secure the funding you need to take your venture to the next level.

But here's where the tricky questions pop up:

  • How do you attract the best investors for your early-stage startup? And more importantly,
  • How do you select the right investor for you?

When choosing the right investor for your startup, it's important to consider specific characteristics that align with your business goals and needs. Some key qualities to look for in an investor include industry expertise, a proven track record, functional expertise, and a strong network.

Let's dive into what our friends from Carta suggest​​ to do to vet potential investors.

How do you find the right investor for your startup?

1. Industry Expertise

In short: has this investor worked with startups in your industry before?

Investors who have been hands-on in your sector understand the ins and outs of it more than you do.

Their knowledge of the current market, emerging patterns, and potential obstacles can help you develop a successful growth strategy and leverage your business. Do not underestimate that!

2. Proven Track Record

We know some deep pockets are tempting, but don't get carried away by them. Instead, review the track record of the Venture Capital (VC) or angel investor that has piqued your interest.

A history of successful investments is a much stronger indicator of an investor's capabilities to support you than the size of its check.

One way to evaluate the success of a VC firm is by looking at its gross internal revenue (IRR). A higher IRR over a longer period of time indicates a stronger track record, suggesting that the firm has the expertise and ability to support the growth of your company.

To start getting some insights, you can research:

  • If they have had any successful investments and/or exits.
  • What's the track record they hold in your sector?
  • Have they invested in any startup in the past 12 months?

3. Functional Expertise

The most beneficial venture capital firms typically offer a range of services in addition to funding to support you.

In addition to funding, the best VC firms often offer a range of services to support you. This may include discounts on business software, an on-site operating partner, PR contacts, or help with new hires.

While this is not mandatory or full-time support from the investor, it's good to take it into account when considering a VC firm.

4. Strong Network

Angel investors and Venture Capital firms have a robust network that can open doors to potential customers, partners, and industry experts.

Depending on where you want to expand, it may be important to consider the size and location of these networks.

If you're looking to expand your operations to the US, connecting with an influential VC firm in Miami or New York can be your gateway to powerful connections.

There, now you know some key points to look for when fundraising.

The big question now 👉 where can you search for these investors' information (or honestly, who should you look for to start with?)

Where can you find investors' information?

You can start by asking your entrepreneur friends, searching LinkedIn, checking Angel List, or paying for a monthly subscription to Crunchbase. 

Whatever your go-to source, keep in mind that organizing your fundraising will not be a one-day task.

👉 At Lazo, we recognize that trying to raise capital can be draining and time-consuming. To address this challenge, we've developed Lazo One, an AI-powered tool that provides tailored investor recommendations through user-friendly chat conversations.

Its effectiveness stems from its integration with Crunchbase's comprehensive database of investors and startups worldwide. 

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Simply by registering at Lazo One for free and connecting your company information, we can generate investor suggestions that align with your industry sector, funding stage, geographic location, and other relevant criteria.

Let's check out the key points we just discussed with the Lazo One AI tool.

Find Investors from your industry with Lazo AI

Let's say you are a fintech raising your Series A and looking for US partners, specifically in Miami. 

You can ask "Who are the top Series A investors in Miami for finance startups?" and wait 5 seconds for Lazo AI to do its research. Since it has all the Crunchbase knowledge, you can rest assured it won't skip a single potential investor in The Magic City.

Investor's Track Record with Lazo AI

Likewise, we want to know which of these investors has had recent significant activity. We asked it for the best investors in Miami with proven track records, but you can also ask, for example, to see investments made in the last 12 months.

Investor's Expertise with Lazo AI

These days, the AI can even tell you which VC firms have been more generous with their Portfolio Companies. If you'd like to rely on your future investor suite of services to leverage your business, you can ask Lazo AI for help.

Following the same example, you can ask Lazo AI: Help me find VC firms that invest in Series A in Miami and provide a suite of services for a startup's growth. 

With this information, we recommend checking those VC profiles in Crunchbase and reaching out to any Portfolio Company within your network. They can confirm if the fund actually provides the support you're looking for.

The success of an investment may ultimately depend on the quality of the partnerships you get along the way. 

Lazo wishes to be your co-pilot on this journey.

Lazo One’s Fundraising services, powered by Crunchbase and Lazo AI, will significantly increase your chances of finding the best investors for your startup.

Find the right investor for your startup, track every conversation with Smartlists and let Lazo AI do the heavy lifting for you.

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