Doing the right choice is a step closer to success.

Alpha said: How to choose the dozens of target institutions that are most suitable for you among the many investment institutions? After identifying the target organization, how do you know which suitable investors you should contact and how to get to know them in the most appropriate way? These are all very headaches for entrepreneurs to raise money. The original author, Mark Suster, is both a successful entrepreneur and a veteran investor. He gives useful advice based on his own experience on these issues. The Alpha Commune (public number: alphastartups) compiles these suggestions and welcomes domestic entrepreneurs. Read and think.

The old saying goes, “Look at two steps, take a step.” The military shooting process is: “Aiming, firing, hitting the target,” and they all emphasize the importance of preparing in advance. For entrepreneurs, before financing, make a good financing plan, identify your own target investment institutions and target investors, and figure out how to contact them in the most appropriate way, which can bring huge benefits to financing.

How to choose the right investment institution, how to reach the target investor?

This article provides some basic suggestions for entrepreneurs in the financing process. They are more obvious to some experienced entrepreneurs, but more inexperienced entrepreneurs still make mistakes on these basic issues.

1. Create a list of financing plans

This is the first action every entrepreneur should do when financing, because the starting point of the financing plan is to establish a list of potential investment institutions (people). This may seem simple, but as far as I can see, most entrepreneurs have not done this or are not doing well enough. Once this form is created, it can be shared and discussed within the financing team (this team must be short and succinct), or it can be shared with your FA. A complete list should contain the following:

  • Target Investor

  • Target Investor

  • Location of the company

  • Who can reach the target investor

  • The scale of this round of financing

  • Financing status

  • Notes and comments

  • Next action

2.Target investment institution priority ranking

After completing the above list, the target organization should be prioritized, generally using A, B, C and abandoning the four levels. In the financing process, you can add or exclude potential investment institutions from this list, but when the financing reaches a certain stage, you should control the number of investment institutions at the A and B levels to 8-10, because the number is too much. It is unrealistic. If there are more than 20 core potential investment institutions, even if you work harder, you will not have enough time and energy to deal with them, thus losing focus and producing counter-effects.

Note, This list is not a wish list. Your priority ranking is not based on how perfect an investment institution is, but how likely it is to invest in you. Even if you target a top investment institution, if it is found to be really inappropriate for your company, then the organization should not be labeled A.

Marking an investment institution as A can only be based on two grounds: “It is most likely to vote for you” and “you most want it to vote for you.”

In addition, C-level institutions may be your “safety mat”, they are a good choice, but not your first and second choice.

If it’s me, I’ll also make a “follow-up” list for some of the smaller investment institutions, but this should be done after your lead investigator has a broad spectrum. In a round of financing, you can have some investors, or not, but in the current market environment, it is best.

3. Matching degree of investment institutions

When you break down a potential investment institution into A, B, and C levels, the next thing to do is to figure out who is best for you.

The first factor to consider is the financing phase. If you are melting the Angel Wheel, the target financing amount is $1 million to $1.5 million, and the institution you are contacting manages $1.2 billion in funding, then it is obviously inappropriate. If you want to integrate the C round and the target financing amount is 20 million US dollars, you should not contact a fund with a fund management scale of 80 million US dollars.

The second factor is the industry. If you are a SaaS company and the investment organization is mainly focused on the consumer sector, you don’t have to waste time; if your entrepreneurial field is education, after you understand it, you can find that the target investment institution has not invested in education. Then you should change the target.

The third factor is the geographic area. Although many head-end investment institutions already have a global perspective, financing always requires multiple communication and meetings between the two parties. Choosing an investment institution that is geographically far away from you will cost additional communication costs. This communication cost often affects the success rate of financing.

The fourth factor is competitive. Has the target agency invested in a company that is very similar to yours on the track and in business? If they vote, they may not repeat the investment. For example, if an institution has invested in Lyft and your company is doing shared travel, then they have a good chance of not voting for you.

As an investor, I can make it clear that when encountering an entrepreneur who knows very little about my investment institution, this can be a huge turning point (of course, turning negative). This is not about personal emotions, but rather that an entrepreneur who does not want to spend a few minutes browsing our official information and knowing about us means that we are not the intentional institution that he values. On the other hand, if he did his homework in advance and let us feel respect, things will move in the right direction.

4. Who is your target investor?

After going through the above steps, you have screened out dozens of investment institutions that are right for you, and divided them into A, B, C, etc. according to the possibility of obtaining investment. Then you need to determine these. Who is the most suitable person to contact in the target organization. Some inexperienced entrepreneurs take it for granted that it is good to have first contact with the target organization. In fact, this untargeted behavior may lead him to detour.

How to choose the right investment institution, how to reach the target investor?

Generally speaking, there are the following types of investors in different investment institutions:

Investors other than partners. They deserve to be touched, but entrepreneurs need to go further and get in touch with the decision makers of this organization. In some institutions, such investors will have some recommendation and decision-making power, while others will not.

Close to retired partners. They have a very successful investment experience, but they may not invest in many projects and have gradually withdrawn from the front line.

Super busy partner. They have already invested in a number of successful cases, which may already be board members of 15 companies, or they may be managing partners of this investment institution. They will still look at projects and projects, but due to time constraints, they will be very picky about the quality of the project. The good news is that once the project is seen, they have the strength to push the deal quickly; the bad news is that you may not be able to reach them so easily.

New partner. The good news is that the new partners have not yet established a solid industry position, they want to vote for good projects to prove themselves; the bad news is that you are not sure they have enough influenceForce to promote the completion of the transaction.

Active partner. This is a more suitable candidate. They already have benchmarking investment cases and are board members of several companies, but they are not busy enough to have no time at all. At the same time, they not only have the ability to promote the completion of the transaction, but also remain hungry and hope to consolidate their status with more good projects.

After reading these, entrepreneurs will definitely ask a question: “How do I identify and recognize them?”

First of all, you need to have enough information sources. If you are not prepared, don’t act rashly. Secondly, when you have a list of target investors, you can bring it to your entrepreneurial friends, lawyers in the industry, investors who are not suitable for you but have good relationships, and ask them to provide advice. . If you have a deep conversation with these friends who can provide comments 10-15 times, you will have a more accurate understanding of who should be in contact with whom. In the process, you can ask them these questions: “Is this partner still active in the front line?”, “Does he invest in e-commerce?”, “Is he willing to invest in companies in the Boston area?”

When I was an entrepreneur, I also had financing activities. I set up a list of potential investors and sought advice from industry professionals. In the process, I got some new investor candidates that I didn’t cover before. Over the years, I have invested a lot of energy to build a real relationship with the people on this list. Although most of them don’t invest in my company, every relationship is valuable because it helps me better understand the industry.

5. Engage with target investors through high quality referrals

After identifying the target investors of the target investment institution, the entrepreneurs already have an understanding of them and are likely to know their personal contact information such as emails and social accounts. At this time, it is difficult to resist the temptation to contact them immediately through contact. But you’d better not do this because there is only one chance to leave an initial impression on the investor, and if you are not prepared, you will only mess it up.

How to choose the right investment institution, how to reach the target investor?

We can think of financing as a process of sales: investors are customers, companies are products, but investors only invest in a limited number of companies; they trust, and believe that the company that invests will grow into a value-creating company. enterprise. Their initial impression of you will determine whether you are smart, believable, leadership, competitive, pursued, etc. in their eyes.The founder of good quality. Then they will further seriously consider whether your business ideas are feasible and based.

Whether you like it or not, we humans use the “filter” to explain the world because it helps us determine the value and quality of things. That’s why when you hear a person who graduated from Stanford University with honors, worked at Google, had a successful entrepreneurial experience, and made other decisive achievements, he would be more willing to be close to them. This is not to say that there is superstition in the Ivy League or famous companies, but that “filters” play an important role in people’s judgment of value and quality.

The reason for this is that is because it is very important to introduce your candidates and ways to potential investors. You need to spend a lot of time and effort preparing to determine the most suitable introducer and presentation. In my opinion, another entrepreneur who has already achieved something (if the entrepreneur in the target portfolio is the best) is a very suitable candidate.

The reason for running a network in the industry is that they can not only help you identify the target, but also become your introducer. When I was financing, I brought the list of potential investors to my friends and said sincerely: “I don’t want to ask you to help me introduce and introduce to the 10 investors on this list, but if I would be very grateful to introduce you to 1-2 of them.” In the end, I got a high-quality introduction of more than 100 times, which took a lot of time and energy, but this kind of high-quality introduction brought ” The society proves that it is worth a thousand dollars. It gives me a good start with the target investors.

6. To follow up, be modest

When the entrepreneur and the target investor have the first successful meeting, they will expect things to go smoothly to the next step: more meetings, a detailed understanding of the company, and even signing TS to obtain investment.

But more often, things are not going so smoothly. After the meeting, the investors did not give a clear answer, and there was no follow-up meeting. At this time, some entrepreneurs would be disappointed, and some complaints would be inevitable.

The real world is such a reality, everyone is very busy and the competition is fierce. If you are not able to get customers (investors) to participate in the process of selling your own company, it is difficult to become a successful entrepreneur. The key to most successes is to implement it all the time. When it comes to seeing investors, the success of financing may be whether it continues to follow.

This may seem unfair, but the important rule of sales is that when you are a seller, you have to follow up. In short, first organize your mood and stay modest. In many cases, it is not arrogance for investors to follow up, nor is it disappointing for your project. He may see other entrepreneurs after he met you. He has to attend several board meetings, see his own LP, and deal with various kinds ofTricky things. Entrepreneurs who have confidence in their projects and perform well during the first meeting should continue to keep in touch with investors and create opportunities for the second and third meetings. This opportunity may be a new co-founder, but a more detailed introduction to the project. In short, entrepreneurs must take the initiative to follow up until the funds are credited to your company account.

This article is compiled from Medium, the original author is well-known investor Mark Suster.