How to Build a Shortlist of Investors When Raising Capital For Your Startup

Where exactly do you go hunting for investors to raise capital for your startup? They don't grow on trees that's for sure. It's about looking under rocks and knocking on the RIGHT doors.

So you've been up seven nights in a row burning the midnight oil writing a business plan that you can take to prospective investors.

You've also spent a mountain of time creating a pitch deck presentation and rehearsing an accompanying dialogue.

All this while running your business day-to-day and looking after the millennia of other items that quickly dispel the apparent ideals of freedom and liberty that come with running your own business.

It's time now though for you and your team to get out there and start presenting your business case to investors so you can secure some much needed oxygen for your startup.

But where exactly do you go to find these mystical investors that the media always keeps referring to as if they grow on trees down at the local park?

You can't just head on down to Woolies and start whispering in the ear of random strangers "I have a secret". Well you can, but you'll probably get locked up. So where do you go?

​In my previous job as a matchmaker for startups and investors it was my job to find as many high net worth individuals (commonly referred to as angel investors) as I could.

There always seemed to be an inverse correlation between the wealth of an investor and their discover-ability so the big fish can be hard to catch. This doesn't mean it is an impossible task though.

In fact, it is a common myth among first time entrepreneurs that they don't know any investors. Nothing could be further from the truth.

You'll actually find that you aren't that far removed from finding your next investment partner. They may even be living in your neighborhood, or living next door watching re-runs of the Wonder Years. 

To make the job of building a shortlist of investors a little easier, I wanted to highlight some resources that I used in my previous job to find the sometimes elusive high net worth individual. Here they are in no order of importance:

1. Your Local Accountant

Your friendly accountant is one of the best intermediaries you can use when it comes to finding suitable investment partners for your startup. If you haven't got an accountant then get one. 

Accountants have intimate knowledge of their clients balance sheet and P&L, not that they will ever disclose any of these details to you.

They are perfectly placed though to give you a friendly introduction or referral to someone they think might be a suitable investment partner for your business.

2. Commercial Lawyers

Ditto for this group. They have intimate knowledge of every aspect of their clients business but they will never disclose any of this to you.

They might be able to arrange a friendly introduction for you though depending on suitability and capital requirements.

3. Business Colleagues

It is only natural that your business colleagues would have an interest in your new startup or business. Ask around with your current workmates if still employed, former colleagues if not, close business associates, and even the colleagues of your spouse, de-facto, family or friends.

A small allocation to high-risk venture capital investments is looking more and more attractive for superannuation accounts post the release of the Government's Innovation Statement. So this method is not so far reaching and the appetite for startup investment is expected to grow. 

Here's a great article here from Sydney-based accelerator Blue Chilli that goes into more detail on the expected impact of the Australian Government's new stance on innovation.

4. University Professors

University (college in the US) professors are some of the most networked people on the planet—some make Anthony Robbins look like a loafer when it comes to networking.

A select few have a serious commercial streak as well, despite their preference for the hallways of academia.

The professors inside the Technology and Innovation departments of city and regional universities are especially fruitful. Start reaching out with some of your old professors, or professors at your local university.

5. University Alumni

Have a think about the people you used to go to university with. There's bound to be someone who is interested in what you're doing.

If you didn't go to uni then think about friends from high school. Some of those early dropouts that everyone laughed at can turn out be very successful business people so you might want to do a brainstorming session here.

6. Other Start-Ups

This method is often overlooked but it can be a treasure trove of introductions and referrals.

Think about a startup who has recently raised capital. Chance are they have had a 100+ coffee meetings with investors. One investor among the 100+ that they have met with might be a perfectly good fit for your startup.

Get in the habit of asking other startups if they know of anyone that might be interested in investing in your business.

7. Online Media

I read an article the other day about how Sherpa—a peer-to-peer delivery platform—closed a $1.2 million funding round from private investors including Hotels Combined co-founder Michael Doubinski.

​This tells me that Michael Doubinksi has an appetite for marketplaces like Sherpa that connect private couriers with customers via an app. 

If you have startup with a similar business model but in a different vertical—say on-demand graphic design projects via an app—then it might be wise to try and reach out to someone like Michael Doubinksi. If he's not interested then he might know someone who is.

Go to Twitter or LinkedIn to find a common connection or even an email address so you can get in touch. The world is pretty small these days so don't view this as an impossible task. This is a good article on how to connect with online influencers. 

You can rinse and repeat this cycle a number of times using the daily gamut of media updates on companies that are closing out funding rounds.

The Hard Part

Marketing guru and serial entrepreneur Seth Godin says you should always ask yourself what the hard part is when starting a business—the easy part is building a website, setting up a company, doing your business cards, designing a logo. The hard part is marketing your business and finding customers.

The same holds true when trying to raise capital for your business—the easy part (by easy I mean it is only 20% of the process) is putting together a business plan, slide deck and one-page summary.

The hard part is finding investors.

"Everyday I'm Hustling"

The above list provides seven methods for finding investors. They are all viable methods but there is definitely no short cuts. You really have to hustle your butt off to find the right investment partner.

I haven't even talked about online Angel investment groups. This is deliberate. The methods listed above will get you connecting with real people and get you building real relationships.

I hope you can use this list to find your next investment partner, or partners.

The process isn't easy but if your business has serious traction—customers, sales, a good business model—then you'll probably find that investors start falling over themselves to get a piece of your business once you start spreading the word.

Just remember it takes 6-9 months on average to raise capital for your startup so stay patient and persevere. 

Happy hunting and comment below if you are in the midst of raising capital for your business, or have raised capital in the past and you want to share some of your own experiences.

DOWNLOAD your FREE REPORT: “6 Capital Raising Myths Exposed” by clicking CLICKING HERE.

Ben Hucker is the founder and principal of iEvoke. He has 10 years’ experience consulting to listed and private companies in Australia. Ben thrives on being an active member of the start-up and small business community and uses his passion for writing and business to help clients create a powerful business case for investors.