When it comes to that special partnership between founders and investors, alignment is where the magic begins.
Founders, as you consider investors — ask: who do you want by your side?
1. Practical fit is the lowest-hanging fruit to evaluate.
Don’t be shy to ask about level of participation. This demonstrates confidence on your part while also delivering crucial information.
Does the investor like to lead or follow? What is their check size? Are they actively involved with the boards of their portfolio companies, or are they more hands-off? These questions give insights into how frequently that investor goes “all in” for companies similar to yours or takes a more diversified approach.
2. Personality fit will indicate if you and your investor’s personal values are compatible.
Your personal values will affect the way you lead your company. Your investor’s personal values will affect the way they offer support to you.
The problem-solving founder may find harmony with an investor who’s obsessed with systems thinking and iteration.
The mission-driven founder may mesh well with an investor who’s hungry for a company with a clear social impact.
The consumer-centered founder can sharpen her skills with an investor who’s aggressive about product-market fit.
An investor who holds relevant expertise in your shared obsession will be attuned and empathetic to the mindset that you will approach opportunities and setbacks with.
3. Expectations fit will evaluate if the investor’s timeline and milestones for the company align with yours.
One aspect is growth rate. If an investor is geared towards a high velocity, “quick exit” type of startup, but you prefer to build a long-term, stable company, your expectations for pacing will clash in the future.
Have this conversation early on to find an investor who you feel does not rush you or slow you down.
Another aspect is risk. A founder who likes to take bets may face tremendous resistance from an investor who prefers a more conservative approach.
Understanding how open your investor is to uncertainty and experimentation will help you decide if they are the right partner for you during pivotal moments of your business.
A complementary partner is an investor who will energize you for maximum growth. These investors align with you fundamentally, and add fresh/tenured perspective in their method of support and expertise. They are founder-focused, as in focused on your success, not necessarily “friendly”.
Founders, what are your personal “must-haves” when it comes to finding an investor who’s complementary to you?
