Ask a FinTech: What do you look for in an investor – besides capital?

June 12, 2020 | Investment

Written by FinTech Alliance

Ask a FinTech: What do you look for in an investor – besides capital?

The investment journey is unique for every FinTech startup as they look for the capital to take their business to the next level.

When seeking investment, whether that’s seed funding or a later series, a FinTech looks for something different, be that a network, partnership or even just sound advice from someone more experienced. This week we asked three FinTech leaders what they look for in an investor and why it goes so far beyond capital.

“There’s a fundamental difference in the need from investors, depending on the stage of development within the company,” comments Steve Lemon, Co-Founder at Currencycloud. “In the early stages, it’s about having investors who not only provide capital but who believe in the journey and the long-term vision of the company. Someone who can help guide you, make introductions and provide the support that is needed at that stage.”

Later on, says Lemon, the situation is less about finance and more about finding a strategic partner for the business as it matures. “At Currencycloud most recently with our Series E funding round, we were looking for investors that could help accelerate our growth by becoming partners as much as investors. Companies that could help expand our product offering, our global footprint, and introduce us to new markets. We felt we needed investors that bring a wealth of experience and industry knowledge to help us scale and target more enterprise-class clients.”

At Harbour & Hills FS, the need for partnership is also keenly felt. “An ideal investor is not someone who just puts their money in a business,” says CEO Rahul Tripathi. “An investor is more than just a financial partner – an investor is also a mentor to the company.

“For us, an ideal investor would be someone who is able to offer valuable insights on how to scale up internationally. An investor should also be open to support strategic growth of the investee company by helping them expand their network with their experience and strategic associations.”

Fundraising can often seem like a buyer’s market, and it’s tempting for startups to go with the first investors that like their pitch. However, it’s also important to remember the investee has a choice to make, and to avoid placing square pegs in round holes.

Loyalize CEO David John puta a lot of time not just into finding investors, but investigating what’s right for his business in the long run. “choosing the right investor in the early stages of your business is a decision that shouldn’t be taken lightly,” he advises. “While it can be tempting to accept funds from anyone who is willing to give them to you, it’s important to understand who they are and what they want out of the investment.

“In the case of Loyalize, I look at what other companies they’ve invested in; whether they have a specific interest in the space; and – crucially – do they share our vision?” John explains. “It’s also helpful if they can introduce you to other investors or potential partners, or give you market insights that help you make better business decisions.”

Raising capital at any stage can be daunting, but taking the time to think about who you want your investor to be and what kind of involvement they will have in your business over the coming years will be hugely beneficial in the long run.

 

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