Not every investor is a good fit for you and your company.
The same way as not every person with a wallet in their pocket is a good fit to buy your product.
So what do we do about it?
For your customer - you define your Ideal Customer Profile.
And for your investor - define your Ideal Investor Profile.
A simple concept which will save you lots of wasted time in meaningless conversations and pursuit of the wrong investors.
Let’s dig deeper.
Why do you need an Ideal Investor Profile?
Simply put: to increase your chances of closing a good funding round.
Having a defined Ideal Investor Profile helps you to craft your story and materials according to the specific investor. You know where to find these investors, how to target them, how to impress them and how to push their FOMO buttons.
And most importantly - which investors to not waste your time with.
I see fundraising pretty much like sales.
Knowing exactly who you target drastically increases your chances of success.
The worst thing you can do…
…is to target every investor. This is a recipe for failure.
If you’re a healthcare startup, it makes no sense to target fintech investors.
If you’re in Europe, it doesn’t make sense to target Australian investors (unless you’re expanding there).
If you’re raising pre-seed of €800k, it doesn’t make sense to target investors investing in €5m+ Series A rounds.
And so on.
Most times founders skip the Ideal Investor Profile idea, because:
A) They haven’t thought of that;
B) They’re too lazy to do it, because it requires a tiny bit more work of research, compared to blasting 1,000 investors with the same cold email.
How to define your Ideal Investor Profile (in 6 simple steps)
To make it easier I’ve prepared a short spreadsheet workbook for you.
Get it FREE here: Ideal Investor Profile Workbook
Let’s walk through the 6 steps:
1️⃣ Investment Stage
What stage is my ideal investor investing in?
Examples: Pre-seed, Seed, Series A
2️⃣ Geography
Where is my ideal investor based and investing in?
Examples: DACH, Central & Eastern Europe, Europe, USA
3️⃣ Investment Ticket Size
What is the ticket range of my ideal investor?
Examples: €200k-€500k, €500k-€1m, €2m-€5m
4️⃣ Industry Focus
What is the specific industry priority and experience of my investor?
Examples: Fintech, Healthcare, Climate, Space, Defence
5️⃣ Business Model Focus
What is the specific business model focus of my investor?
Examples: SaaS, Marketplace, Hardware, Consumer
6️⃣ Value add beyond capital
What company building aspects do I need support with?
Examples: Reaching PMF, Hiring, Contacts in Asia
Here are two full examples for - Bad and for Good Ideal Investor Profiles.
Bad IIP example:
"We’re open to any investor who likes what we’re doing and can help us grow.”
Good IIP example:
"We're raising a €1m Seed round and looking for a lead VC who:
- invests in Seed-stage B2B SaaS startups
- typically writes tickets between €500k–€1.5M
- is based in Germany, Austria, or CEE, but open to EU-based funds with interest in CEE
- has experience backing Healthtech companies
- can support with hiring a Head of Product and introductions to enterprise health systems in DACH"
When I was a VC, countless founders approached me even though they did not fit our investment focus, whether because of stage, check size, industry, geography, or other criteria.
This is time and effort wasted.
Even if you spent only 5 minutes going quickly through the above questions, it’s better than none.
That’s all for this week.
See you again on a Thursday soon.
