Flipping the script on investors important for founders

Find the right investor for your company

An ideal investor profile outlines the key characteristics, criteria, and values your company seeks in an investor. This serves as a compass, guiding your startup in its search for the perfect partners who will contribute significantly to its success. Finding a good match between investors and founders is something investors themselves understand and support.

“Being a founder also means you need to be efficient with your time and you don’t want to waste time talking to investors who aren’t a fit,” says Arden Tse. “The last thing you want to do is be pitching steak to a vegetarian.”

As a Principal with venture capital firm Yaletown, Tse fully supports the idea that founders need to ask the right questions and should consider screening their own investors, not just accepting what might come along.

“You’re going to spend a lot of time with this investor so there has to be a compatibility in terms of philosophy, values, just to get along. In early days, yes money is money, but you have to think ‘do I want this person’s advice, can I work with them, do I want them calling me regularly, can I call them,’” says Tse.

Chelsea Gillett is a venture investor representing Luge Capital in Alberta and agrees; not all investors are equal or a good fit for some founders.

“You’re entering into a long-term partnership that could be several years,” she says. “Do they (investors) understand the nuances of your industry?”

Create an investor profile

As a founder or startup CEO consider building an investor profile with these essential elements.

After identifying the ideal investor profile, your next step is to categorize potential investors based on their characteristics and fit. This means organizing investors into different groups or categories according to their expertise, strategic value, investment preferences, and alignment with your startup’s goals. Categorizing investors allows you to prioritize and approach each group with a customized strategy, focusing on those who are most likely to be a good match for your business. By doing so, you can optimize your fundraising efforts and increase the chances of finding the right investors.

Look out for red flags

There are also some red flags to watch out for when talking with investors, say both Gillett and Tse. A good investor should be someone who wants to support a founder’s vision and growth, on the relationship not solely on returns, Gillett says.

“If it’s a pre-seed round and someone is asking for multiple board seats – that’s off mark,” says Gillett as an example.

“Often the investors with the smaller cheques tend to worry more and ask a lot of questions. Where as investors who write the bigger cheques tend to be easier to deal with at an earlier stage,” says Tse.

A good investor is also someone who can help open other doors, someone with a network that’s relevant to your industry, your sector and your startup company, says Tse.

“Other than capital, I always bring it down to two things, insight and introductions! Those are the two most valuable things that can differentiate investors. Because we all have capital, we can all write a cheque. But at the end of the day, what else can we offer.”

If a founder is considering an investment from a larger VC firm or even angel investors, consider asking that investor for a list of companies they have previously invested in – and then make the phone calls, says Gillett.

“I’d encourage founders…to reach out to other portfolio companies to discuss the relationship,” she says. “It can be hard to understand who is out there.”

Choosing the right investor is more than a financial decision, it’s a strategic partnership that can shape your startup’s future. By building a clear investor profile, watching for red flags, and prioritizing fit over funding alone, founders can take control of the fundraising process. Remember, you’re not just finding people to fund your business, you’re selecting the people who will help build it.

Luge Capital and Yaletown are both members of the Venture Capital Association of Alberta and have previously received investment funding from the Alberta Enterprise Corporation with a focus on seed and series A funding rounds.