Making meaningful decisions about diversity, equity, and inclusion (DEI) rather than just haphazardly ramping up workloads goes beyond simply building a team.
Ensuring diversity within the cap table has been a must, and has proven critical to success. Doing so diversifies investors based on a variety of criteria that provides far more value than funding alone.
Prioritizing diversity takes a great deal of knowledge, perspective and experience. For this to happen, the main thing is to focus on creating a product and a team that people want to invest in. But after that, many startups talk about adding diversity in capital, but how to do it?
Establish investor criteria from the start
For example, in selecting investors based on a variety of factors, such as the type of investor (VC, angel, family office, etc.), gender, race, experience, and a deep passion for the mission. When arriving at the criteria, the founders should write down the reasons why each factor is important to the startup.
Breaking down capital to diversify investors based on a variety of criteria will provide much more value than financing alone.
If the company wants to address a problem that affects women around the world, it is particularly important for the founders to have women investors, racially diverse investors and industry professionals who understand the magnitude of the problem they are trying to solve.
When establishing the criteria, the objectives must be clearly defined and the value that each investor brings must be identified. As a team, think about what these investors would want if they could do it their way and why.
As a startup, it's easy to get distracted and consider accepting capital from one of the first investors to express interest, even if they're not the best fit. It's important to stay focused and think about how carefully selecting your investors can affect your business.
Create an investment funnel
In this process, it is common for the CEO and responsible persons to speak with more than 250 investors selected according to the established criteria. Before approaching these investors, it's key to create a target list consisting of long-awaited investors and realistic goals. You have to make an effort to talk to each of them.
One approach is to treat this process like a sales funnel: maintain a pipeline of investors, ask for referrals, follow up on feedback, and take every opportunity to seek advice.
When building an investor funnel, expressing what you want is crucial to finding the right investors. At the end of each investor pitch, state what you are looking for in an investor and why. Finding the right investors is like finding the right team members: be honest about your expectations and address what you want them to bring to the project.
One consequence is that the right investors provide introductions to funds that focus on diagnostics, which is crucial for our next step in raising awareness. Serie A. They also incorporate a strong network for recruiting capital, personal understanding, industry knowledge and international experience to facilitate global expansion.
A breakdown of investors could have these proportions:
35% inversores privados
34% mujeres (mujeres inversionistas o fondos encabezados por mujeres)
26% capitalistas de riesgo
23% familiares y amigos
18% inversores internacionales
15% grupos de ángelesIdentify what can compromise
Some investors will have certain expectations, needs and demands. As tempting as it may be to lure an investor, consider whether what they're asking for aligns with other investors and your company's goals.
For example, it is easy to find, in the seed rounds, large and attractive investment groups to work with. However, the investment size is usually significantly smaller than any of the major investors and they ask for the same rights. As much as you want to work with them, it's often difficult to adjust the definition and terms of top investors for your own round. It's not fair to the rest of the group.
That's not to say small checks aren't valuable. Some investors put in less than $10,000 and prove to be a huge value-add and market-opener. The point is that you need to consider what goes with the check and identify the best way to determine who you want as an investor and within what limits. An investor should never be attracted because it is fashionable or flashy; rather concentrate on the value they bring to the business.
For many founders, being able to be selective when building their cap table is a dream scenario, but this aspect of the business should not be overlooked.
You need to take the time to ensure that you are making the best decisions for your business. Ultimately, building a company that people want to invest in and therefore have more control over their cap table.
