Before identifying the “most likely” investors for a round, founders need to make a set of intentional decisions on their fundraising strategy and approach to find investors for a business.

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# 1 – Lead vs Party Round

In many cases, users need a lead investor to bring the round together. This is particularly true when: (a) Round size is significant ($1m+), and (b) There are no other institutional investors on board.

In some cases, however, users do not need a lead investor, and can do a “party round” whereby a large number of small checks add up to a sizable investment amount. This is particularly true when users: (a) Have raised from a credible accelerator and/or other institutional investor, and (b) Are willing to spend significant time to bring together a large number of small checks.

For party rounds, users should focus on follow-on investors that write small checks. For lead investors, users need to target firms that have historically led a significant percentage of their total investments as the lead.

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# 2 – Stage Decision

For venture-backed companies, each round stage carries a very specific set of expectations (in terms of both round valuation and business progress).

As an example, pre-seed investors routinely invest in companies that are doing zero (or minimal) revenue, and are pre-product. For pre-seed investors, investing at the idea stage is the norm, and their risk/reward model is built around writing checks at that stage. Seed stage investors, however, rarely invest in companies that do not have signfiicant operating data and revenue growth.

For each round stage, it is important to understand the stage definition and the underlying investor expectations. A common misstep in the fundraising process is when users target and/or engage investors that do not specialize in their stage.

For guidance on investor expectations at each stage, refer to this section here.

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# 3 – Round and Check Sizes

The targeted size of the round significantly impacts the types of investors that users must pursue when finding startup investors

For small rounds ($0-1m), there are numerous options – users can put together party rounds consisting of angels and small check VCs. For larger rounds, it may be important to have a lead investor, and that may require a different search criteria.

Specifically, founders raising a $2-3m round can target investment firms with check sizes between $100-300m. Users looking to raise a $5-10m round may need to target investors with large fund sizes ($250m+).

For guidance on how to determine round size, refer to this section here.

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# 4 – Sector Focus

Some users may take a broad approach and focus on investors that have previously made investments in their parent sector. Examples would include users looking for investors that are familiar with B2B Software, Healthcare or Consumer.

Other users may prefer to take a more targeted approach and focus on investors that specialize in a given sub-sector. Examples would include users looking for investors that specialize in biotech or life sciences.

Prior to identifying investors, it is important to make an intentional decision on whether to go broad at the parent sector level, or to go deep on a specific sub-sector.

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# 5 – Geo Focus

Some users may want to identify investors that are familiar with a given continent (I.e. North America, or Europe). Others may want to identify those that have previously invested in certain types of geographies (I.e. Egypt, Bangladesh, Indonesia or Pakistan). It is generally important to determine a specific criteria (driven by a clear thesis or rationale).

QuickstartSample Criteria