Third blog in a series by Joy Lindsay, Managing Partner, Sofia Fund. View Blog I here and Blog II here.
In my first two blogs of this three-part series, I covered two very important attributes that the right investor for your business should be able to offer – business acumen in running a company in your industry, and help in structuring and executing your financing strategy.
Rounding out the ideal criteria for the best-fit investors for your business is their willingness to draw from their extensive network to help your business advance. An investor should be able to introduce you to others who can also contribute to your startup success:
#1 Your first hires
Your team is the most important factor in determining the success of your company. You can’t afford to make a bad hire or have someone on the team who is underperforming. It’s also difficult to know who to hire when. With limited resources, hiring the right person at the right time is critical. Your early investors should be able to provide leads for good candidates, whether they be developers, a CFO, strong sales or marketing people, and help you determine if they should be employees or contractors. A strong investor has experience investing in startup companies like yours and/or running companies in your industry, so they should have a stable of solid contributors who have been successful in previous roles. The investor’s ability to make a contact on your behalf is of significant value, given that startups can’t afford to make a bad hire when their teams are small and close collaboration is paramount.
#2 Key industry contacts
Getting those first customers can be difficult if you are cold calling without existing industry relationships. Navigating through the purchasing area of a company or getting on an approved vendor list can be extremely challenging. Ask your investors if they have contacts you can leverage to help open doors to land those initial sales which are key to gaining early product validation, momentum and revenue. In addition to making introductions, investors should be able to use their industry expertise to coach you on the best strategy for the situation. Connecting entrepreneurs with potential customers is an important value-add the right investor can bring to the business.
#3 Potential board members
Startups often struggle with finding the right composition for their board of directors or team of advisors. A well-networked investor can help you develop a diverse board comprised of high-level experts in your industry, while offering advice on everything from governance issues to strategy. The best investors have experience participating as members on numerous boards and can advise you on what they’ve seen that works for companies similar to yours.
Sofia Fund partners provide their portfolio companies with access to their extensive contact database. We are successful investors who are serial entrepreneurs and senior level executives from some of the country’s largest companies. We have been active in the entrepreneurial community for decades, particularly in the tech and healthcare industries.
If you’re an entrepreneur interested in a Sofia Fund investment in your business or a co-investor we haven’t met before who is interested in connecting, please contact me at joylindsay@startecinv.com.