Stage and sector are best described as the two parameters that define the focus for a given investor. Most venture investors specialise in one or two stages. And many investors are sector specialists, bringing deep expertise in a small set of sectors.

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Understanding Stage Dynamics

Generally, a small percentage of all venture investors will specialise at your specific stage. These investors understand the risk-reward dynamics in your relevant stage and are excited about the trade-offs. The first and most crucial aspect of precision targeting is to focus on investors that specialise in your specific stage. In order to identify and pursue investors in their specific stage, founders first need to accurately understand what is expected at each stage and then categorise their Company accordingly. For institutional investors, the most common reason for not investing in a given Company is a mismatch between what the investor expects from companies at a given stage (versus what the company offers). A pre-revenue company should pursue investors that specialize at the pre-seed stage. Similarly, companies doing less than $0.5m in annualized revenue run rate should focus on seed stage investors.
For guidance on investor expectations at each stage, refer to this section here.
Using the “Prior Investments by Stage” filter with Metal, users are able to identify investors that have historically concentrated investments at a specific stage. This is best achieved by filtering out investors that have made “at least X%” of their total investments at a specific stage.
StageRecommended Threshold
PreseedAt least 15%+ of all investments at the pre-seed stage
SeedAt least 20%+ investments at the seed stage
Series AAt least 15%+ investments at the Series A stage
By focusing the raise on investors that specialise in the relevant stage(s), founders can improve conversion and response rates.

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Understanding Sector Dynamics

With the exception of pre-seed, most venture investors that lead rounds require a certain level of familiarity and understanding of a given business model to proceed with an investment decision. Investors that have done prior work in a given sector may be more likely than others to understand a given Company’s focus. Sector familiarity comes in two broad shapes:
1

Investors Specialising in Given Sector(s)

Sector specialists are best viewed as sector-specific investors. These can be easily identified by filtering for investors that have made a minimum percentage of their portfolio investments in a specific sector.
  • Recommended Filter: Minimum % Investments in Selected Sectors
  • Value Threshold: 3-5%+
  • Sector Selection: Start with selecting all sub-sectors within a parent sector
2

Investors Familiar w/ Given Sectors

Investors that are familiar with a given sector are ones that have made at least a few investments in the sector. These can be easily identified by filtering for investors that have made a minimum number of their portfolio investments in a specific sector.
  • Recommended Filter: Minimum # of Investments in Selected Sectors
  • Value Threshold: “3”
  • Sector Selection: Start with selecting all sub-sectors within a parent sector
The below visual illustrates an important point — only a small fraction of all venture investors are familiar with a given sub-sector: Ultimately, a given sector is liked and disliked by many investors. When raising capital, founders need to identify investors that believe in the sector (as evidenced by prior investments).
For guidance on the value of being aware of financings in your sector, refer to this section here.