What To Look For In An Investor

7 entrepreneurs share advice on what to look for in an early-stage investor

One of the most important relationships you will have as an early-stage founder is with your investor. This relationship is long-term and isn’t just about funding for the next phase of your company’s growth. More importantly, it’s about gaining valuable insight and counsel from seasoned operators and investors who are focused on your company’s success. Given the importance of this relationship, we wanted to offer some perspective for founders who are navigating the process of fundraising during this time. So, what’s our advice on what an entrepreneur should look for in an investor? To help answer this, we reached out to a group of founders and CEOs who have been through the process in New York and other markets:

1. Matt Gillis, CEO at Clean.io

“Just like any key hire, you are looking to add to your team. Money is a commodity; it’s everywhere. Understanding the gaps you are looking to fill and what expertise you are looking to add should help inform you in your selection process.”

2. David Klein, CoFounder and CEO at CommonBond

“Are they excited about your vision? Are they excited about you and the team? Have they “been around the block,” so that when you are facing things for the first time that feel really big and consequential, you can lean on their pattern recognition from past experiences to help you see a clear path forward? Is there one thing they have other than capital that you think will add a lot of value? Do other entrepreneurs speak highly of them? Are they good, decent people?”

3. John Furneaux, CoFounder and CEO at Hive

“Great investors understand the balance between providing counsel and letting the team execute. They have the humility to realize they’re at 10,000 feet, far from the day-to-day execution. They understand the moments they can influence a startup for the better, and the times a management team should be left to figure out their own problems and learn from their mistakes. I’m told this has a lot in common with parenting!”

4. Brock Blake, Founder and CEO at Lendio

“First and foremost, look for someone who not only understands but also truly believes in your vision. This should also be someone you feel will be most helpful when things are not going well. I recommend talking to other CEOs who have worked with the investor you’re considering. Ask them how the investor responded to the worst news they have delivered to them.”

5. Philip James, Founder and CEO at Penrose Hill / Firstleaf

“First of all, it’s difficult, because most entrepreneurs just want to close the fundraise as fast as they can. However, it is very important to remember that you will be in partnership with your investors for many years. It’s important to take a step back and assess what you need as a founder so that you can align with the right VCs. If you’re looking for money now and possibly a lot more later, that’s very different than if you think you just need to raise this money and then get to profitability.”

6. Scot Wingo, Founder and CEO at Spiffy

“When you take on an investor, you are in a 5–10, maybe even 15yr relationship with this person. You want them to challenge you and hold your feet to the fire to get better, mentor you, and all that, but you also want them to be there when the chips are down. That’s a real, subtle, and important thing that’s hard to find. Spend a lot of time with your potential VC over meals, some beers, see how they treat folks, check their references, and especially the failures. How did they do in those scenarios?”

7. Charles Bonello, CoFounder and CEO at Vivvi

“Fundraising is a profoundly inorganic process and one I’ve been fortunate to experience from both sides of the table. When you take on investors, you’re taking on legal and moral duties and quite literally married for the duration of your company. Choose wisely — find people who you respect, you trust, and with whom you have a relationship. The first time you talk to them probably shouldn’t be when you’re asking for money. Take the time because it’s an important step.

Most of our investors are people that we’ve known for years and worked with in the past who not only believed in Vivvi but who brought a wide range of experiences across HR, education, and real estate to the table.”

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Tribeca Venture Partners Insights explores topics related to entrepreneurship, leadership, and technology from our TVP Partners, founders, executives and tech community.

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