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

A recommended starting point is to identify investors that have invested in similar companies. These investors are often the “most likely” partners (given the empirical evidence around their prior investment activity 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 description of their Company, enabling Metal’s proprietary algorithms to identify other VC-backed companies that are similar. Users can hit “Settings” from the top-right, navigate to “Product Details”, and fill in the required information.

2

View all VC-backed companies that are similar

In the “Company Search” module, you can now view all companies that: (a) Have raised VC financing and (b) Are somewhat similar to the description provided in Step 1 above. Users can also apply other filters to further refine the list of companies.

3

Shortlist companies that are actually similar

Users can shortlist companies that are actually similar and save these to a list via the “Actions” elliptical menu on the top-right of the Company Search table. 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 the “Investments” filter within “Investor Search” — this will show all investors that have previously invested in the list of shortlisted companies. Users can then layer other filters on top to further refine this list.

Investors that have invested in similar companies can be an excellent starting point. As an example, a Company building a foundation model may want to identify investors that have invested in other foundation models before. These investors tend to have a thorough understanding of how foundation models work, resulting in high-context conversations.

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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 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. Typically, the lead investor is the first to invest, and does so without waiting for other investors.

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 large party rounds without necessarily requiring a lead investor.

For guidelines on how party rounds work, refer to this section.

For users looking to structure party rounds, the focus should be on identifying follow-on investors that write small checks in existing rounds.

The lead decision drives the user’s decision for the following filters: Inclination to Lead

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

Using the sector insights section within Metal (Insights > Sectors), 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 (Insights > New Funds), 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