Finding investors to buy into your dream is hard work. I’ve seen too many entrepreneurs give up because they just couldn’t find investors. Having worked with some of the most active investors in the Northwest, I discovered 5 secrets to raising capital for startups no one ever tells you.

Pedigree matters

Going to a top 10 university and/or having a top company on your resume in your field matters. For instance, a Stanford grad who worked at Google for a few years is going to be looked at differently than a state school grad who worked at an unknown small company. It’s just part of the screening process. These investment groups receive hundreds of applications every month so it makes sense they use credentials as a screening tool. Now if this isn’t you (which for the majority of you it’s not), that doesn’t mean you’re SOL. Just the opposite- it means you’re going to have to get more creative and work harder to land a meeting and impress.

Knowing people matters

People want to work with people they know and like. Investors know the highest quality deal flow comes from introductions. Also, meeting new people take time and energy which most people don’t have these days. The best way to land a meeting with an investor is an introduction from someone they know well. Not just any introduction, but an intro from someone that investor actually knows. With Linkedin and meetups these days, it’s easy to meet someone that knows someone. But let me warn you I’ve seen my fair share of poor introductions which sometimes hurt the company versus helps them.

Less about the idea and more about the team

The interesting thing I’ve observed is investors are more likely to invest in an average business with a great team than an amazing idea with an okay team. It was the strangest thing to watch. Over a few years I understood what was unconsciously happening. An investor would rather put his or her money on a team that could 100% execute on an average business versus a team with an amazing idea that could maybe 70% execute. It goes back to the risk/reward.

Star power (hype) is a thing

Sometimes a startup gets a ton of press, wins a few competitions, and is trending on Linkedin and Twitter. This actually matters because investors have FOMO (fear of missing out). If you have a chance to compete in a few competitions and get some press, use that to your advantage because it doesn’t last long.

Conclusion

As with anything, the more you do the better you get. The same is with raising money from investors. I learned some truths that were never said out loud by investing alongside angels and VCs for several years. Raising money is hard work and requires confidence and finesse. I hope you are able to utilize this information to develop your fundraising strategy and successfully close your round. If there are any stories you would like to share, comment down below.