Playing Matchmaker: 5 Types of Investor Personas

By QuickBooks

5 min read

How do you know when you need an investor or a group of investors for your business? This is a question that every business owner with a growing company has to answer. Quite frankly, coming up with a good answer can be a bit confusing when you’re starting up.

So, you try to answer by asking more questions. “What stage am I at? How much overhead do I have? Do I see a stagnant growth period coming? Am I scaling faster than demand? What are my goals with the company? Do I generate $10 million in revenue, then sell? Or do $100 million and then acquire?”

Asking yourself the aforementioned questions is vital to understanding whether or not you need investors. But while you’re likely more concerned with getting money, you should be more concerned with who you are taking it from. The “who” is a very important part of the investor equation, because who you get money from will likely determine how that money is spent.

Let’s break down the “who” here. We’ll detail a few persona types—and the expectations you should have for them—you’ll consider during the equity fundraising process.

Persona A: The Behemoth

These are your big investment houses (i.e. Venture Capital or Private Equity firms) that have a substantial amount of experience and capital. They typically have hundreds of millions or billions under management, as well as portfolios that include popular names like Facebook, Twitter, Tumblr, Pinterest, Snapchat, Uber, AirBnB and thousands of others.

I call them “behemoths” because they typically include the who’s who of investors that have been involved in deals for decades. These are groups that have a formula that just works, especially when handling companies that are experiencing high growth.

When getting involved with a behemoth, make sure you’re comfortable with their terms. They know what they want and what makes sense, but it may mean losing some of the control you currently have. Whether or not you cede that control is a decision you’ll have to make. But before you make it, ask yourself, “Can I get to where I want to go without them?” Don’t lead with your ego, lead with what’s best for your company.

These guys handle large investments. If this is what you’re looking for and you fit their profile, then you may want to look into them.

Examples of behemoths: Andreessen Horowitz, Khosla Ventures, Accel Partners, Sequoia Capital, 500 Startups

Persona B: The Angel

An angel investor is more of an affluent individual who provides capital for business startups, usually in exchange for convertible debt or ownership equity. From my experience, they tend to range from passive to aggressive, depending on their background, expertise and goals.

An angel is sometimes described as a retired entrepreneur who may be interested in more than a monetary return, hence they may want to be a bit more hands on with your company.

If that’s the case, you might want to consider looking for personalities that are complimentary to yours. This includes skill sets they can bring to the table that you don’t currently have on your team or within your company. Preferably, your angel should be someone with a working background knowledge within your industry.

These are investors from both a financial aspect and a human one. Hence, they are very much mentors.

Examples of angels vary from state to state: Tech Coast Angels, Sand Hill Angels, 500 Startups, New York Angels

Persona C: The Advisor/Connector

An advisor/connector-type investor can be a part of an angel fund or venture capital firm, or may operate completely on their own. I put this persona on here because they are very much into supporting someone they truly believe in. He or she should have a proven track record of success, be extremely savvy and come to the table with a well-connected network.

Now, this does not mean they will just open all the doors for you and the champagne will flow. They are just as busy as you, only they might be running several other ventures at the same time. What it does mean is that they believe in you and they can guide you, so long as you do the work. This is a bit more of a hands-on relationship, as they expect to see you execute tasks at your highest level. If it all works out, they can get you from point A to B in an expedient fashion.

Examples: The advisor/connector comes in all types of different forms, and possess qualities and backgrounds as unique and diverse as the next person.

Persona D: The In-House Talent

In-house talent is something I like to refer to as having a whole team support your company. I’m finding several venture firms now doing this, and it’s a highly collaborative process. In essence, instead of an investment house solely providing funding and advice, they also have the talent needed to execute pivots or redesigns, and others who can grow and scale your company. Missing a graphic designer or a great backend developer? No problem. Need a go-to-market strategist and doer? Done. It’s all in-house.

They’re not solely giving you money to go find the talent. These types of people are here to help you get to where you’re going by doing it right then and there. In this situation, be prepared to work together through all the details versus thinking it’s just about you.

Examples of in-house talent: SproutBox, Collaborative Fund

Persona E: The Stealth

You may not see them all of the time, but these guys are on it. They may be smaller, but they play big and are smart. When I say smaller, I mean they are investors who execute. They are skilled in business operations, marketing and branding. They know what works, they know how the behemoths work, and yet they stay close to the entrepreneur’s company to keep them focused on scale.

They are assertive go-getters who are very much sharks, and they stay in an investment range that allows them to take companies from point B to C. In other words, they play in the sweet spot. Be prepared to execute day in and day out for them. They expect results from hard work, but they understand you don’t know everything. In fact, that’s why they’re there.

Examples of stealths: Wasabi Ventures, Canal Partners

All in all, there are several personas out there looking for the right business to invest in. Once you answer the questions at the beginning of this article, think through what type of relationship you want with an investor. Part of that equation is knowing your own personality and where you can be flexible. Growth is a collaborative process, so regardless of who invests in you, be prepared to share.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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