The odds of getting venture capital for a seed stage start-up is about one in 4,000. So it's unsurprising that every year many international executives come to me asking what is the best way to raise the capital they need to create and scale their companies. While in a previous post Prof. Hakan discussed how to present your proposal to investors, below I detail the most efficient and effective way to find professional investors.
1. Find a list of investors.
Sometimes it is difficult to find an accurate and complete list of all the venture capital and private equity entities available to you. To help with this, the map below shows an updated version of a data chart from a recent study IESE did with PwC, about innovation in Spain. The chart offers the distribution, segmented by region, of venture capital (VC) and private equity (PE) entities in Spain[1]. The circles in the regions show the quantity of VC/PE entities. Each sub-circle includes the name of the fund. Then each fund includes the minimum quantity for each investment and the managed capital by the fund.
2. The nearer the better.
In the study we explained that investors don’t usually invest in startups that are far from the city where they live. They want to have their invested companies on “their radars.” Therefore, focus your efforts on the investors that are near to your company or to the region where you develop your business.
3. Identify your investor’s strategy.
At the end of the day, investors want a return on investment. Among professional investors, their investments follow a strategy. Any opportunities that fall outside that strategy will probably be declined. In consequence, analyze their strategy: the average ticket of investment (e.g. the fund invests in the range of $0-$500,000 or $10 million -50 million), the type of business models (e.g. B2B or B2C), etc. To make this even easier, if you are looking at Spain, in the following chart you can filter VC and PE entities by region and even identify those who have the range of investment tickets you are searching for. This way you will have the best chance to get investment.
By Josemaria Siota, project leader at IESE Business School
[1] Note: the entities are full members of the Spanish Association of Venture Capital, Growth and Investment (2016).
