How Do Startup Investors Think?
If you haven’t already, please study my free Bootstrapping course.
If you’ve been bootstrapping your company for a bit, and are wondering whether or not to raise money, remember, investors are looking to multiply the money that they put into startups.
Multiply by how much? 2X? 3X? 5X? 10X? 20X?
This question determines the strategies of what they’re looking to do:
- Look for Unicorns (build companies with billion-dollar market caps): Go from 0 to $100M in revenue in 5–7 years.
- Look for early exits (sell capital-efficient startups and make a lower multiple, but nonetheless, have a successful outcome).
And then, different investors have different investment theses.
Just like you look for product-market fit, you also need to look for investor-entrepreneur fit.
A seed investor looking for a Unicorn won’t invest in a capital-efficient startup that is better suited to a $30M strategic exit. And vice versa.
If you haven’t raised money before, understanding the fundamentals would be critical for you.
You can develop understanding of the fundraising process through some of these courses:
Looking For Some Hands-On Advice?
For entrepreneurs who want to discuss their specific businesses with me, I’m very happy to assess your situation during my free online 1Mby1M Roundtables, held almost every week. You can also connect with me during our Rendezvous meetups, and check out my Bootstrapping Course, our YouTube channel, podcast interviews with VCs and Founders.
Photo credit: Manoj Vasanth/Flickr.com