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Fundraising: Finding the Right Capital Partner

September 29, 2021
Fundraising: Finding the Right Capital Partner
Written by
Peter Franconi

Make sure your capital partner is the right fit to take your company to the next stage of growth in our Fundraising Series.

Building a company takes blood, sweat, and tears. When it comes time for your capital raise, you want to make sure you find the right partner for the next stage of growth. But how will you know who is the right fit?

Choosing a financial partner should be a courting process on both sides. If you are the only one pitching, you are doing it wrong. Just like any courting process, the more you know about yourself and what you’re seeking in a partner, the better your chances at choosing the best group.

In subsequent posts, we’ll outline questions you can ask and why you should be asking them to help you identify fit. Questions such as “do they share our vision?” and “do they have operating experience in our sector?” can ensure you make the most informed choice.

For starters, make sure your company metrics match the investor’s focus. Ask about their target revenue, EBITDA, growth rate, and other KPI’s they use to identify fit. It could be helpful to ask about the metrics of recent investments to get a sense of what good looks like for them. Investors don’t all look for the same thing and don’t all have the same strategy to deliver returns.

Why is alignment so important? It ensures you both know what a good outcome looks like and are working towards the same goal. Very rarely is scaling a startup a smooth process – there will be countless bumps and forks in the road. Confirming you understand how firms work through challenges with portfolio companies and what success looks like to them is crucial.

In this series we’ll cover the five primary criteria:

  1. Investment Criteria
  2. Industry Experience
  3. Operating Experience
  4. Collaboration
  5. Exit Planning

As we continue to write this series, check back here for the links to each post. Or, sign up for our email list and follow our LinkedIn and Twitter for regular updates.