In a given raise process, the highest leverage activity is to focus on the “most likely” investors. When founders take a data-driven approach to zoom in on the right investors, they experience higher conversion rates at every step of the funnel. The below guidebook provides an overview of how to identify investors that are the most likely partners for a given raise.

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1 – Identify Investors in Similar Companies

For a given raise, the most logical starting point is to identify investors that have invested in similar companies. This is best achieved by using Metal’s “Company Search” module that allows users to:

1

Provide a description of their Company

Users can type in a specific description of their Company, enabling Metal’s proprietary algorithms to identify other VC-backed companies that are similar.

2

View all VC-backed companies that are similar

View all companies that have raised VC financing before that are somewhat similar to the description provided.

3

Shortlist companies that are actually similar

Shortlist companies that are actually similar and save these to a list. Ideally, these should be companies that are similar, but are not direct competitors.

4

View investors that have invested in shortlisted companies

Load the saved list into “Investor Search” in the “Similarity” filter header and view all investors that have previously invested in the list of shortlisted companies.

Metal’s proprietary algorithm uses advanced similarity search to identify all companies that have raised VC funding and that are similar to the user’s description.

Users can then identify or shortlist companies that are actually similar and can save these to a list. Subsequently, users can load the save lists within “Investor Search > Similarity” filter to view a comprehensive list of investors that invested in the shortlisted companies.

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2 – Develop an Elimination Criteria

In order to identify investors that are a strong-fit for a given raise, users first need to develop an elimination criteria — a set of requirements that qualifies a given investor as a likely target. To develop an elimination criteria, founders typically need to make the following key decisions.

When round size is significant ($1-2m+), users need a lead investor to bring the round together. The lead investor plays a critical role by: (a) Setting the valuation cap for the round, and (b) Coalescing other investors to participate in the round. Typically, the lead investor is the first to invest, and does so without waiting for other investors to do so.

When round size is small (<$1m), founders can often structure a “party round” whereby a large number of investors with small check sizes make up the round (without requiring a lead investor). Similarly, companies that are backed by well-known incubators (such as YCombinator or Techstars) are often able to structure larger party rounds without necessarily requiring a lead investor.

For users looking to structure party rounds, the focus should be on identifying follow-on investors that write small checks in existing rounds. For founders looking to do a large round with a lead investor, users need to target firms that have historically led a significant percentage of their total investments (I.e. 10-20%+ of total investments led at their specific stage).

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3 – Identify “Most Active” Investors at a Sector Level

Using the sector insights section within Metal, users can identify investors that have been the most active in a given sector. This is achieved by first selecting a set of parent and/or sub-sectors and then applying other filters:

  • Investor Type: Use this filter to limit table results to only “Accelerators”, or “Family Offices” or “Venture Capital Firms”

  • Time Period: Allows users to limit table results to a specific time period (I.e. users can see which investors have been most active in selected sectors within a given time period)

  • Continents: Filter can be used to limit table results to a given continent (I.e. users can see which investors have been most active in selected sectors within a given continent)

  • Round Stage: Allows users to limit table results to specific stage(s) (I.e. users can see which investors have been most active in selected sectors within a defined set of stages)

The above effort is most useful to identify investors that have been most active or bullish on a given sector (or sub-sector). This is particularly useful for niche sectors, such as biotech and/or robotics.

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4 – Identify “New Comers” at a Sector Level

Using the new fund insights section within Metal, users can identify investors that have made their first investment in a given sector or sub-sector. Investors that make their first investment in a given space are often interested in identifying more companies that are building in the same space.

Some of these investors may also be new firms that are just getting started. Such investors are particularly appealing given that new firms tend to have the highest appetite to deploy and the least amount of deal flow, making them excellent prospects as financing partners.

Getting StartedGeneral Filters