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How do I choose the best investor for my business?

How do I get money for my own business? It keeps many entrepreneurs busy. Suppose you've talked to some investors. That's already good news. It's even better if more than one investor has indicated they want to work with you. Although, of course, that brings another challenge, because now you have to choose an investor. In this article, we will help you choose the right investor!

Choosing the right investor is at least as important as building a good team. Unfortunately, there are plenty of examples of companies that have foundered because they did not choose the right investor.

Match between life stage of your company and investor

There are different types of investors. Depending on what stage your company is in, some investors are more likely than others. In the idea/plan phase, for example, you will rely primarily on your own savings, whereas in the early growth phase you will be more likely to turn to a business angel. In the downturn or relaunch phase, it makes more sense to go with a private equity firm.

So first, figure out what stage your business is in. We will assume for now that you are in the start-up and early growth phase. Then the obvious thing to do is talk to informal investors, private equity firms or cluster funds.

4 Questions to ask yourself

Once you find out if your potential investors fit the life stage of your business stage, you can take the next step. Asking yourself these 4 questions is guaranteed to get you a lot closer to choosing the right investor.

Question 1) Does the investor have the foundation to move your business forward?

Choosing an investor is not just about money. With the right expertise, experience and network, an investor also contributes to the growth of your business in other ways. So make sure you choose an investor who has experience with your market, field of work or the challenges you face. For example, if you want to start selling internationally, choosing an investor who has done so before is very valuable. Or does the investor have contacts with large venture capital investors? If so, this connection might come in handy in your next round of funding.

Question 2) Can you choose an investor who believes in you and your team?

Ideally, you want to choose an investor who is immediately raving about your business and the plans you have.

This does not mean that an investor should not ask critical questions and test your choices as an entrepreneur. What matters, however, is that you partner with someone who gives you confidence. Again, it's not just about money. An investor must also motivate, inspire and want to push your business to great heights with you.

Question 3) What kind of companies has your investor put money into before?

It's true: past performance ... But that doesn't mean you can't learn anything from the past. In fact, it's important to find out what kind of companies your potential investor has invested in before. If there is nothing among them that resembles your company, then you can ask yourself whether that is the right investor. In addition, it is valuable to contact these previously funded companies, to find out about their cooperation with the investor and how they have fared further.

Question 4) How eager are they to work with you?

When you start choosing investors, you are, in a sense, putting yourself in a vulnerable position. You are offering a piece of your business that you have worked on with heart and soul. And you obviously want investors, so you're willing to sacrifice quite a bit. But it's important not to go too far. Don't let yourself be wrung out by an investor, and pay particular attention to how good it feels in your underbelly. There has to be a click from both sides, otherwise cooperation will be very difficult.

It's about more than money

It is very tempting to choose the investor with the deepest pockets. Yet you have to be careful about that. As you read above, there are other factors that play an important role as well. Don't forget this when you list the offers. Of course, more money gives you more opportunities, but don't let it be the leading factor!

How do I get money for my business?

To get money for your business, choosing an investor is a good option. It is an important step in the process of funding your business. Want to know what else to do? Then download our white paper!!!

Whitepaper Investor Ready
Become investor ready?

In this white paper:

  • What challenges do you face and how do you deal with them?
  • Becoming investor ready in four steps!
  • An overview of all funding options

    Please note that this whitepaper is only available in Dutch at the moment. We are in the process of translating this whitepaper.