Step 1: Get a list of potential investors
The first step in reverse due diligence is figuring out who the investors are out there that might be interested in your business. This step is about casting as wide a net as possible to find all the investors who might be relevant. In the last 2.5 years, we’ve identified over 8500 different investors whether they be venture firms, angel investment groups, angel individuals, corporations, family offices or government funding efforts that invest in entrepreneurs. Unfortunately, or fortunately depending on the way you look at it, many are not household names or have popular blogs or Twitter accounts. That means they may be harder to find, but it also means they may not see the same levels of dealflow as more “popular” investors. This could mean good things for you. But of course, you have to find them.
You won’t be able to identify all of them, but you can start to compile a list. Here are a few options:
- Visit the trade association websites – This means going to the National Venture Capital Association website and seeing who their venture capital members are. For angel groups, you can visit the Angel Capital Association website to get a list of their members as well. The good thing about these sites is they do have lists of potential investors. The bad thing is that a list doesn’t tell you much and going to each investor’s website one by one is a colossal waste of time. And remember, time and money are your most finite resources. Also, these sites are not exhaustive as they only contain their members so corporations investing in young companies, individual angel investors or many of the seed venture capital funds may not be listed. Nevertheless, a good place to start.
- Read relevant industry publications and blogs that talk about company financings – Another way to find investors for your list is to just read (a lot). You probably already do this so keep notes of which investors invested in deals that seem relevant to your business. This is a good way to stay on top of what is going on and have some conversation fodder if and when you meet the investor. This method while good is not great because it doesn’t scale well and by that mean, it can be a time suck. Reading is great to keep you plugged in, but ultimately, you probably want to spend most of the time building your business. Also, these sources may not uncover all the potential investors as they may prefer to talk about certain investors given geographic or other preferences of their coverage. Again, a useful method but it can require large amounts of time.
- Stay right on ChubbyBrain – Yes, we’re obviously biased, but we firmly believe that ChubbyBrain can and will save you time in creating the list of investors and doing much more. The data that venture capitalists, angel investors and If it does not do that for you, email us and tell us why as we’re not doing our job if that’s the case (info(at)chubbybrain.com). Here are some of the ways to use ChubbyBrain to develop the list of potential investors:
- Find investors in companies that are in your space – If you know a company or companies that are in your space, used advanced company search to find them and then visit their funding tab. This will tell you who their investors are and be the start to a list. You can explore each of these investors by clicking on their name which will take you to an overview of the firm or angel and show their portfolio companies so you can see if they are relevant to you.
- Funding Discovery Engine – The FDE will help you develop a targeted list of investors by taking inputs about your business and algorithmically matching it against investors based on how closely their past investments match your business.
Now you have a list of investors. What’s next?