In 2021, venture funding shattered records across the board. Investors awarded $621 billion in funding globally, a 111% increase over the previous year, with the U.S. responsible for $330 billion of this funding.
Right now, a high level of interest in early-stage venture investing is converging with a high volume of U.S. entrepreneurship, and PitchBook analysts say this will lead to solid growth soon.
While capital is a vital part of the investment process, today’s founders want more than just financial backing from their investors: they want a partner that gives them the resources, the feedback and the independence they need to navigate the tough world of entrepreneurship.
7 Things Entrepreneurs Want From Investors
1. Mentorship assistance
It's difficult for new founders to find someone highly successful and willing to take them under their wing. But experienced investors often have a vast network of contacts in different industries, so they have the means to help founders make the right connections.
Startup mentors can range from industry experts to other successful founders. Depending on the startup's goals, the right mentor can help with challenges like finding market fit, scaling, networking and troubleshooting.
2. Collaboration
Investors typically have a well-rounded portfolio of businesses lined up for partnerships and collaboration opportunities.
By working with these businesses, startups can learn best practices and processes that will help them grow faster and smarter.
3. Client connections
It's never easy for businesses to attract new clients. The challenge is even greater for beginners, especially if they're a B2B company where the customer journey map is more complicated, as it requires more touchpoints with your audience, more time for testing and launching pilot projects, etc.
Investment funds receive an enormous amount of applications every year, and often turn down more offers than they accept. However, they usually keep the information about these companies on file, making them ideally placed to help their founders find potential clients and partners within these connections.
4. Candid feedback
Because investors are outside of a business, they have a "helicopter view" of any potential issues with how the business is run.
The best investors will give honest, constructive feedback to founders about problems or poor results. This kind of perspective might be jarring to some founders, but ultimately the candid advice can prove very valuable.
5. Psychological support
Most investors have extensive experience in building and managing businesses. They've been through many of the challenges that founders typically face, so they are uniquely qualified to offer mental support when times are tough. Additionally, it can be a huge mental boost to a founder to have someone in reach who is successful and believes in them.
Investors can think of themselves as trainers who motivate founders to "stay the course" and achieve their startup goals, while showing them how to shift with the demands of their business and the market.
6. Business resources
VC funds and investors have access to far more resources than startups, and they also have the experience to know which resources an early-stage business would benefit from.
For example, a new startup won't need full-fledged PR support, but it might benefit from access to the VC firm's PR department for sharing important news. In addition, investors can help with the process of outsourcing things like legal or accounting services.
7. Independence
Above all, entrepreneurs want the freedom to build their business as they see fit. They're looking for a strategic partner, not an overbearing manager who lists expectations the company must meet.
Investors Can Offer More Than Just Cash
The phrase, "Seek the relationship, not the money," applies perfectly to the founder-investor relationship in today's startup environment. Yes, funding is essential, but building a cooperative, people-first relationship is often worth just as much or more to founders. Investors have a broad network of resources, tools and connections that are sometimes even more valuable than investments themselves.
