Why You Should Prioritize Your Investors

"Investors are not born equal"

The quote above may seem obvious, but most founders I speak to do not realise this simple fact. They also fail to realise how they can use it to their advantage. Prioritizing your investors has its benefits, and there are tactics you can use to do so. In this document, I will explain why you should prioritize your investors. In the next newsletter after this I will show you how to do this for your fundraising process.

The investors will know when you are in the market

The investing world is divided into two categories: the haves and the have-nots.

The haves are the large, established funds that are able to see every deal.

The have-nots are newer, less-established funds that lack the reputation and visibility in the industry. They do not see every deal.

Investors tend to talk to each other, especially the have-nots, who like to discuss the companies they are seeing, including the ones they are excited about and the ones they rejected. Therefore, investors will know when you are in the market and which investors have rejected you.

It is critical to ensure that investors do not know:

• How long you have been in the market
• Which bad investors have rejected you
• The number of investors who have already rejected you

The fund hierarchy plays a significant role in investor decisions. Newer funds always try to co-invest with larger, established funds to increase their brand and credibility, which increases their chances of raising their next round.

Therefore, a term-sheet from a tier-1 or tier-2 fund is like gold dust as it can significantly alter your conversations with other investors. At Octopus, a tier-1 established fund in the EU, I saw this happen frequently. We talked to founders who were having conversations with different funds, and as soon as the other investors found out that we were giving a term sheet and leading the round, they instantly invested in the company. The founder went from worrying about funding to having an oversubscribed round from a single email in less than 24 hours!

You can launch your fundraise with the right process

Fundraising is ultimately a sales and marketing process, where the buyer is a venture capitalist and the product is equity in your company. A successful sales and marketing campaign requires methodical planning and rigorous time allocation to prioritize the most important prospects.

By prioritizing your investors, you can effectively plan and allocate your time. Stay tuned for next week's guide, where I'll show you how to prioritize your investors and launch your fundraising campaign with this prioritization in mind.