I received 3 business plans from companies operating in the internet of things (IoT) space over the last week. We haven’t invested in an IoT company so far and this is unlikely to change in the future. We simply don’t understand the domain well enough.
The domains we invest in are written on our website and made clear from our portfolio companies. They include marketplaces, e-commerce, mobile, classifieds, content, and SaaS startups. If an exceptional startup outside these areas comes along together with a strong reference vouching for the company, that’s likely the only way that we’ll take a look at it. And even then we’ll be looking for an investor with domain knowledge to lead the round.
I share this experience because it’s important for entrepreneurs to research investors before reaching out to them. Doing so will help you save the time which you spend reaching out to investors who aren’t relevant for your startup. You can then use this time to perform deeper research on those investors who are most likely to be interested in your company.
For example, Revo Capital invests in IoT startups and they clearly share this focus on their website. It’s better to spend your time researching the previous IoT investments that Revo has made, trying to understand why they made them, and using this information to structure your business plan when reaching out to Revo, than to contact us.
Since we’re also investors in Revo, I guided the 3 IoT startups that reached out to us to Revo’s website. But you can’t always count on investors to help you find the right investors for your startup. We happen to collaborate with Revo, but many other investors compete. Your best bet is to research and find the right investors yourself.
Originally published at Thoughts of a VC.