Investors love familiarity. “It’s their money, which leads them to play it safe and scour the same homogeneous networks for deals,” says Ross Baird, executive director of Village Capital, a nonprofit in Washington, D.C., that trains and funds startups with an altruistic bent, many of them led by women and minorities. Stats tell how rare those companies are: Of U.S. startups that landed an initial funding round between 2009 and 2014, only 15.5 percent had a female founder, according to CrunchBase. Only 1 percent of funded startups have a black founder, according to CB Insights. So, how to find a more open-minded investor? Baird says to consider these questions.
How do they usually find investments?
Beware those who say, “We like introductions from people we know and trust.” You’re better off with investors who, Baird says, offer “more openings to connect” -- say, an application process or direct contact information.
Are they open to hearing your story?
“People make the mistake of pitching their product but not telling their story,” Baird says. “If you’re an outsider, your own story can be an advantage.” Send a note outlining your startup, the market and your personal history. Rather than asking for a pitch meeting, ask for their feedback. If they’re interested in helping or hearing more, they’ll get back to you.
What excites them?
Look for interviews they’ve done with the media. If they tend to highlight their investments’ market potential, rather than the founders and problems they solve, then you should move on. You want an investor who loves supporting people, no matter the category or market size.
What do you need to do to become investment-ready?
If an investor (or their website) doesn’t offer this information early on, there’s no harm in asking during a pre-meeting correspondence, Baird says. If someone has advice on how to grow your team or gain traction before they write a check, they’re more likely to root for you to get there.