How Startups Find Seed Investors
Let’s talk about finding the first true-believer who will put money into your startup.
There’s a killer Catch-22 about raising money in that you can’t get that first investor until you land that first investor. Having gone through the fundraising process over and over again, I can assure you it’s absolutely as convoluted as it sounds.
Having been an angel investor myself at one point (but no longer), I can also confirm that investing in startups — whether it’s private, angel, or venture capital — is rooted in herd mentality. No one wants to be first, then everyone wants to be next.
This is because the path to providing outsized returns on a startup investment is a unique path for each startup. There is no guaranteed 12-step program for turning early startup capital into a unicorn valuation. Thus, there is no tried-and-true method for finding early investors and securing that early capital.
But there are quite a few guidelines you should absolutely be following to increase your chances.
First, Ignore the Inbound Noise and Scams
Recently, I wrote a post about all the BS artists who will come out of the woodwork under the guise of funding your startup.
I can’t tell you how many experienced founders and generally smart people latch on to one of these types of fake funding programs. I don’t blame these founders. The smokescreens can be velvet and the lure can be crazy tempting, especially when there are no other options.
Gut Check: Abide by this rule: If you didn’t ask for the money, don’t take the money. You won’t see all the strings attached until those strings are wrapped around your wallet. Don’t derail the future before it begins.
Obviously, Be Great At What You Do
I know. Duh. But for the reasons I just laid out in the last section, I need to establish what “investable” means for other readers who are not you.
Gut Check: To get that first investment, you not only need to have a great, game-changing idea, but you also need proof of your potential to execute…