How To Find Startups: Essential Tips for Shrewd Stock Investors
Startups are often exciting new companies with big ideas and the potential to shake up the world. They’re typically full of energy and maybe rough around the edges, but they’re ready to change the game.
Investors are always on the lookout for these entrepreneurs — when a startup hits it big, the rewards can be huge. But there’s a catch. Finding the right startup to invest in can be difficult.
There are tons of startups out there, and not all of them are destined for greatness. Plus, even if you have an awesome startup with a killer product, investors need to find you first. It’s a two-way street. Here’s a closer look at what types of startups are worth the investment, and how investors can find the right match.
What Makes a Startup Worth Investing In?
Investors aren’t just throwing money at any startup that comes along. They’re looking for specific things that make a startup a smart bet.
Let’s break down some of the key ingredients:
Passionate Founders With Skin in the Game
Investors want to see founders who eat, sleep, and breathe their startup. They don’t want entrepreneurs who view their job as a 9-to-5. They want it to be their life’s mission.
Why? Because building a successful startup is tough.
There will be setbacks, long nights, and times when you want to give up. Passionate founders are the ones who will keep pushing, even when it gets hard.
Now, about having “skin in the game.” This means founders have invested their own money into the startup. It shows investors that the founders truly believe in their ideas and are willing to take risks. Would you want to invest in a company if even the founders don’t have their own money on the line?
Traction
Investors like to see evidence that your startup isn’t just a cool idea on paper. To have traction means you’re out there in the real world, garnering attention and making things happen. Maybe you’ve built a simplified version of your product and have people testing it.
Maybe you’ve started making some sales. Numbers talk — if you can show that people actually want what you’re offering, investors start to get interested.
Let’s say you’re looking for a new restaurant to try. You come across two options: one that’s brand new with no reviews or photos, and one that has tons of positive reviews and a line out the door.
Which one would you be more likely to choose?
Most people would pick the busy restaurant… and investors feel the same way about startups. They want to see evidence that other people (customers) are interested, have used the product or service, and found it valuable. This kind of validation drastically reduces the risk for investors.
How To Find a Startup With the X-Factor
Investors are doing more than merely backing an idea. They are backing the people behind it. Here’s where the right team and business X-factor come into play:
Expertise and Delegation
Finding the right talent is key for any startup company. Whether searching startup job boards or networking at industry events, building a team of experts helps make a startup shine.
Think software engineers, marketing geniuses, and product managers — these are the people with the skills to build and promote an amazing product.
Once a startup has the right talent, it’s time to trust them. Investors know startups aren’t a one-person show. When startups delegate important tasks, it shows investors like you that they have the mindset of a true leader.
This means the startup has the potential to scale, something venture capitalists and angel investors generally want to look for. Especially for early-stage startups or top startups breaking into a competitive market.
Here’s a tip: Platforms like LinkedIn and AngelList are great for connecting with startups and founders. These social media platforms become extensions of your own networking, helping you tap into the vibrant startup ecosystem.
Exit Strategy
Investors need to know how they’ll eventually get their money back (and hopefully make a big profit). This is where the exit strategy comes in.
The most common exits are things like an IPO (where a startup goes public on the stock market) or an acquisition (where another company buys a startup). A startup worth investing in should give you solid financial projections.
These show you how much the founder thinks their company will be worth, how much they’ll be able to sell it for, and when you, as an investor, can expect to cash out.
The X-Factor
Sometimes, there’s just a spark between founders and investors — a connection, and a a feeling that this is the team they want to bet on.
Startups should be authentic and genuine here, sharing their vision, passion, and even the challenges they faced along the way. That personal connection can make all the difference.
Where To Find and Pursue Startup Investment
Having an awesome startup is a great start, but getting the money to fuel it? That’s where things get interesting. Here’s a breakdown of some of the most common ways startups find investors:
Angel Investors
Websites like Angel Investment Network are basically online marketplaces connecting startups with potential angel investors. Getting started on Angel Investors can help you find promising startups to invest in — even if you’re only looking to invest small amounts to help get a startup off the ground.
Venture Capitalists
Venture capital firms (or VCs) invest big money into startups with serious growth potential. Think of them as the heavy hitters of the investment world.
It’s not just about the money, though. VCs often take an active role in a startup, offering mentorship, strategic guidance, and industry connections. Places like San Francisco and New York are hotspots for tech startups and VCs.
Crowdfunding
Thanks to the JOBS Act, startups can now raise funds from ordinary people through online crowdfunding platforms. It’s perfect for early-stage startups in the eCommerce, fintech, or consumer product spaces, so looking here can help match you with the right startup if you’re hoping to invest in these specific niches.
Networking and the Power of Introductions
It’s not always what you know but who you know. Attend networking events, startup meetups, and industry conferences focused on your specific niche.
Connect with founders and entrepreneurs on LinkedIn. Building strong relationships in the startup ecosystem can open doors and put you in touch with companies who align with your goals and vision.
Don’t approach potential startups cold. If you can get a warm introduction from someone the founder knows and trusts, your chances of securing a meeting or getting funding skyrocket. Tap into those connections.
How To Stand Out as an Investor
Think of getting investors’ attention as a two-part challenge: you need to make them see you and then instantly convince them you’re worth a closer look. Here’s how:
Let Networking Work for You
The startup world runs on connections. Get out there and meet people. Attend startup events focused on your industry niche, and listen to founders’ elevator pitches.
Consider:
- Industry conferences
- Meetups
- Online networking groups
These create opportunities to connect with founders and startups looking for help getting off the ground.
Use Automation Tools To Streamline Your Outreach
Finding the right startups to invest in is a lot of work. Use tools to help you stay organized and efficient. Research startups in your preferred industry niche, save their information, and create custom email templates tailored to different types of companies and founders.
Automation tools and platforms like ConvertKit can help you set up email sequences, reminders, and follow-ups. This frees up your time to focus on creating genuine connections.
Aim To Find the Right Startups
Not all startups are created equal. Look for founders who have a track record of success in your industry or understand the unique challenges of your specific market.
These are the startups who will not bring you money down the line, but also have the experience and dedication to work hard enough to make that happen.
Offer More Than Just Funding
A good investor will go beyond capital. Offering mentorship and guidance can make you more appealing to startups, especially when it comes to founders who are new to the industry or are still early on in their careers.
If you have years of experience and expertise behind you, you can put this to good use — offer those insights to startups and founders to add value to your partnership.
Be Transparent and Reliable
Transparency is key. If a founder knows they’ll be able to trust you and rely on you, they’re more likely to partner with you. Have a proven track record of reliability, whether it’s with other startups you’ve invested in or otherwise.
Be on time for meetings or calls, and follow through on your word. These small things can make a major difference when it comes to making yourself stand out as an authority figure in the industry.
Prioritize Your Personal Brand
If you’re networking, it’s likely that the people you talk to will Google your name later on. If you have a well-established personal brand, those people will be able to find everything they need (or want) easily — helping you stay at the top of their minds.
For example, I’ve made my personal brand a priority over the years to establish my spot as a source of truth in the entrepreneurial world. From Instagram to YouTube to Founder OS, I’ve carved out a spot for myself in my niche, ensuring that I stand out as an authority figure.
Let Founder OS Guide You to Success
Are you ready to build an extraordinary startup? Maybe you’re tired of feeling stuck or going it alone. At Founder OS, we believe every founder deserves the tools, support, and mentorship to create a business they love, a business that gives them freedom.
We’re not just about funding; we’re about building a founder flywheel. That means providing the knowledge, the community, and the expert guidance you need to make real progress every single day. Because at the end of the day, done is better than perfect.
Join the Founder OS family and experience the difference:
- Tap into a powerful network of mentors, investors, and fellow entrepreneurs in the startup community
- Access proven strategies and resources for every phase of startup development
- Get actionable feedback and expert advice to help you avoid mistakes and propel your startup forward
Want to stay on the cutting edge of all things startup? Sign up for the Founder OS newsletter. It’s your weekly dose of insider tips, industry news, and inspiration delivered straight to your inbox. We can’t wait to see what you build. Apply to Founder OS today, and let’s get started.
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