Qualify investors that are actively deploying capital.
When qualifying investors, the investing velocity is an important indicator of risk appetite. An angel investor that makes one investment a year has a very different posture versus one that makes 5+ investments each year. The same concept also applies to institutional investors.
Investors that are in a super active phase are excellent targets — these firms are well capitalised, are actively deploying capital, and have the right risk appetite for early-stage venture investments. The below are two important characteristics for super active investors:
Decision Process
Super active investors tend to have crystal clarity on their process to get to a decision.With these firms, the investment decision happens in weeks and through a well-defined process.
Decision Criteria
Super active investors have a clearly defined criteria against which they make each investment decision.With these firms, the decision criteria tends to be predictable and non-random in nature.
Institutional investors making 10+ investments per year and angels with 5+ investments per year are considered super active.
For investors that have a minimal activity level (I.e. less than “3” investments in a given year), there may not be a common thread as to the underlying reason. Some firms have a unique investment model whereby they invest in an extremely selective manner. Others have run out of capital and are simply unable to finance a large number of investments.Generally speaking, if an investor has had minimal activity in the prior year, it is worth paying close attention to their strategy. There is a high likelihood that they are looking for very specific types of investment opportunities that may not align with the user’s Company.
