When you’re talking to potential investors, they each have their own way of figuring out whether to invest: whether your idea really will change the world, or if it’ll fizzle out and flop. Having built and sold several startups, and now as CEO of SeedLegals, I’ve seen thousands of pitches and met countless investors. In my experience, investors can be grouped into one of five different personality types. When you know what type of investor you’re dealing with, you can adjust how you tell the story of your business to best demonstrate your venture’s value and better engage your new potential investor. Here, in no particular order, are the five types of investors you’ll meet and what they’ll want to see in your pitch:
1. The SEIS seeker
This investor personality type is unique to the UK and could also be called the ‘Gimme my SEIS/EIS’ type (although there might be equivalents in other countries). If you’re a founder in the UK, you’ll know about SEIS and EIS tax incentives and the financial appeal these hold to certain investors. This investor won’t be all that emotionally invested in your project — they’re interested in the kind of tax breaks they can get if they invest in your company. If you encounter this investor type, make sure you’ve got your Advance Assurance and say so prominently in your pitch.
2. The Spreadsheet Scrutiniser
This investor is going to unpick your business plan and scrutinize your figures. Like SEIS investors, they’re not too fussed about what you’re actually doing or how you’re changing the world, they’re more interested in your traction, numbers, and revenue. From the minute you encounter The Spreadsheet Scrutiniser, they’ll be analyzing your potential for growth. This investor might give themselves away when they want to show off that they’re a spreadsheet expert and/or they sprinkle their emails or conversation with terms like CAC (customer acquisition cost) or LTV (lifetime value). They’ll ask why your business plan is only three years and not five, why you haven’t included dividends, how you’ll allocate your funds, and so on. When you encounter this type of investor, prepare for a grilling. You’re talking to a numbers person, so make sure your numbers stack up. If your company aims to save the planet and isn’t focused on making much money in the process, any conversations you have with a Spreadsheet Scrutiniser will be short. Instead, to look for an investor whose priorities align with yours, which could be the next personality type…
3. The Philanthropist
This investor is the polar opposite of the Spreadsheet Guru. Ridding the oceans of plastics, helping to end poverty, creating world peace — whatever your mission might be, for this investor, it isn’t about your company making money, it’s about doing something positive for the planet. This investor might be independently wealthy or they might simply want to do good with their money — either way, the story you present to this investor needs to highlight how you’re creating positive change by doing something socially or environmentally conscious. The borders with this personality type can be fuzzy: some Philanthropists will value the positive change element of your business more highly than whether or not you’re making money, whereas for others it does all come down to the bottom line. Generally, when you’re in the initial stages of finding investors, it will be clear whether the investor is mission-driven or growth-driven. You can then tailor your pitch to appeal to their priorities.
4. The Hobbyist
This investor might not be too familiar with the startup community or perhaps they’re a little older than most investors, well established in their career with some capital to invest. The Hobbyist isn’t overly concerned with making a huge return on their investment — for them, investing is an engaging pastime. The Hobbyist is unlikely to want to invest a huge amount and in a way, you could consider them like a lone crowdfunder: they want to be associated with an exciting company as an early investor, without having to invest a fortune or take on much responsibility. For this investor, you can adjust your pitch to emphasize how exciting and innovative your idea is, and make sure they feel swept along with your energy and enthusiasm. Often they’re not bothered about your company hitting unicorn status, they simply enjoy feeling that they’re a part of a new and innovative venture.
5. The Aspiring Founder
A big clue that you’re dealing with an Aspiring Founder is that they have a highly-paid job doing something very different from the startup ecosystem. The big difference between the Hobbyist and the Aspiring Founder is that deep down, this type would love to be a founder themselves but they’re not quite ready to take on the risk or give up the day job. Instead, they’ll use your company to try out life at a startup by proxy. The Aspiring Founder can be a passionate investor, opening doors for you and making helpful introductions. But this personality type can drive founders mad with unsolicited feedback or a constant stream of suggestions. Their eager and well-intentioned support can cross the line to become overbearing. To maintain a good relationship with this investor, set clear boundaries early on. When you’re clear from the start about where roles and responsibilities lie and how you’ll work together, you’ll channel the Aspiring Founder’s energy and attention to genuinely benefit your business.
How to find your best match
When you recognize your investor’s personality type, you’ll better understand which aspects of your company story will be most appealing to them. Even before you meet investors, it’s helpful to look objectively at your business model and goals to work out which investor personality type or types will be the best fit for your company. Often founders discover that having a mix of different investor personality types can benefit your company in the long term because they each require you to pay attention to a different aspect of running a business. Finding the right investor is a bit like dating: you’ll want to find a personality that works well with yours, someone who understands and shares your aspirations, and ultimately someone you can see yourself committing to and spending a lot of time with. Does the investor you’ve met feel like a natural fit for your business? If so, congratulations, you can build on that chemistry to form a strong founder-investor relationship. If you’re still looking for investors, take a step back to assess your company’s identity, strengths, weaknesses, and goals. Then get out there and meet investors. Listen carefully to their feedback, work out which personality type they are (secretly of course), and adjust your pitches to match. And just like dating, don’t give up if you don’t find ‘The One’ straight away — you just haven’t met them yet.
