HQQA011 Who is your ideal investor?

What they mean

They are actually asking why you’re pitching them specifically, and if your description does not match the person you’re currently talking to, then why are you in the meeting room! You want to craft this answer to be different depending on to whom you’re talking to. Investors like to feel special.

Deep down they know they are checkbook, but they want to feel that their existence means something more, AKA they can provide value-add. Founders need to appeal to their egos to get their wallet.

This is best done by doing some research into the person’s background so you know how to sell to them.

To be clear though, you are not raising from a firm, you are raising from a Partner at a firm. The Partner you have is your dude. That’s who you report to and need to keep happy.

• They can fire you
• They can not do their pro-rata
• They can talk shit to other investors
• They can bore the pants off you (not in a good way) in board meeting (BORED meetings!)

Pick your Partner carefully.

So the best answer is you sought out the firm for THAT partner. You want him.

Ok, but why would you want a particular investor?

• The partner gets your industry and was an operator before
• They recently raised a fund and so have dry powder (They are not 5 years into the fund and are out of investment period)
• They ‘get’ and invest in your industry
• They have not invested in direct competitors
• You have positive feedback from other portfolio company founders
• You heard they make quick decisions and have reasonable terms
• They are a brand name you can use to establish credibility
• They have incredible founder support (A16z, Frist Round Capital etc)

What you need to say

“We want to develop a relationship with an investor who can stay with us through the next three rounds. The reality is that taking investment from VCs is more like a marriage, so the size of fund of investor is important, as is the quality of the partner. We also want to have people on our board who are going to be able to be fantastic sparring partners to challenge us. 

There really are not many investors around who get enterprise SaaS. So, you are a founder and bootstrapped an incredible enterprise SaaS startup yourself. You get the struggle. I want you to be on my side.

Khaki Capital just closed a $700m fund so we are perfect for the stage of your new fund life. We checked and you have no directly competing portcos, but you really are covering the space.”