Believe it or not: securing an investment is more than just raising money. It's about finding a visionary person (or people) who match the stage of your company, your mission, and even your personality. When you find the right investor, it's like the perfect marriage. You have the same vision, communicate well, and want to be successful together for the long-term.
Since founding ZappRx in 2012 and raising nearly $15 million in funding, I've realized an investor can make or break your company's success--fortunately, at ZappRx, we're backed by the right team. But, if you find yourself meeting to evaluate a potential investor, here are 5 questions to ask to determine if it's the right fit.
1. Can you share details about past investments? This is a no-brainer. Of course you'll want to know about the companies this investor has supported. But, more specifically, after your meeting, research these companies. How successful were they? Did they develop disruptive products or ideas? Did this investor make an early bet on the company? If so, why? Was he or she right? How did this investor handle headwinds - did they dive in to help their portfolio companies or make the founders' lives difficult?
If an investor has a good track record of investing in visionary companies who address market needs, chances are, they're right about your business, too. And, they can rely on their past successes to mentor and guide you.
2. After making an investment, how involved would you like to be with the company? Maybe you're looking for a hands-off investor who requests a quarterly update. Or, maybe you're looking for someone with deep industry experience who is willing to meet with you regularly and advise the direction of your company.
Early on at ZappRx, friends and family members provided the initial seed funding. Our seed investors appreciated an occasional update--and they still do. But as our team grew, we needed larger funds from investors with industry experience. Now, ZappRx is backed by two of Boston's largest life science venture capital firms.
3. Are you willing to help find potential customers, partners, or new hires? Engaged investors can introduce you to sales leads, strategic partners, or even new team members. They draw on their industry experience and long list of contacts, so you can get in the right room with the right people, quickly. Our investors have been instrumental in helping us meet potential partners and customers.
4. Will you help me solve problems? Risks are an inevitable part of an early-stage company, but great investors will help you identify, minimize, and mitigate these risks. This is critical; investing is more than just writing a check. It involves throwing oneself behind a company and going full throttle. Good investors stand behind their CEOs when it gets bumpy. Great investors help founders see problems before they arise and take steps to clear hurdles.
5. What is the real reason that you would invest in my company? Hopefully the investor will demonstrate support for your mission and your vision. You need investors who truly believe in you as a founder and your team, and want your company to be as successful as you do. These investors will roll up their sleeves to help you and stand behind you on a rainy day. Stop at nothing to find great investors. Do your diligence - they are your partners on the path to success.
Zoe Barry is the Founder and CEO of ZappRx. Formerly of AthenaHealth, a Fellow in the Boston Startup Leadership Program. Zoe began her career originating and executing high-return strategic investments at hedge fund Dawson Capital in New York. She graduated with a B.A. in Anthropology from Columbia University in 2007 and currently mentors undergraduates in the Columbia College Women in Business Society. Follow her @zoebarryceo.