One of the biggest lessons any founder should consider whilst fundraising is to really understand who they’re bringing on to their cap tables. In particular, this means researching potential investors to understand their criteria for investment.
Now, this differs from investor to investor, but ultimately all investors would agree that there are 4 things that make any startup successful. That’s Team, Timing, Product, and Execution. But I believe overarching all of this is luck - because let’s face it - we all need a little bit of luck on our side when it comes to being a successful founder!
When it comes to what factors are more important when making a decision to invest, every investor will have a slightly different diligence process – as this is what is part of their secret sauce. However, they will agree that depending on which stage the founders are at, their decision will be weighted slightly differently depending on what attributes the founders can display.
As an early-stage fund that invests anywhere from Pre-Seed to Series A, we at Chasing Rainbows, have built a robust diligence process that includes 4+ meetings with founders before we would be willing to make an investment. On top of this, we place the following importance when considering an investment, which can be attributed to the stage a founder is raising.
This importance looks like the following:
Pre-Seed - Team
Seed - Product
Series A - Execution
Obviously, timing affects all of these, but in order to get past the first meeting with us, you really need to be able to answer the following questions: