Which Investor to Approach and What They Expect: A Journey Through Funding Phases

"If money talks, investors are its translators—each with their unique dialect!"

Raising capital is a pivotal milestone in the entrepreneurial journey, and navigating the investor landscape is like trying to unlock the correct door with a specific key. Each investor has a different expectation based on where your company stands—whether you’re a startup with an idea, or a scaling business on the verge of going global.

Here’s a thought-provoking breakdown of which investor to approach depending on the stage of your company, and what they expect from you when you walk into that fateful meeting.

1. Angel Investors: Your First Faithful Believers ???

Stage: Pre-revenue or early revenue Expectation: Vision, Passion, and a Solid Proof of Concept

Angel investors are often individuals with disposable income looking to invest in early-stage companies. You’re likely to approach them when your company is at its infancy—a scrappy startup with nothing but a prototype, passion, and a market itch you're scratching. Angels bet on you as much as they do on your product.

They expect to see:

• A killer pitch deck showcasing the why of your product.
• Evidence that your product has market demand—even if it’s just a few users or customers.
• An inspiring story—convince them you're the next Steve Jobs.

Think of angels as your first faithful believers, offering relatively smaller investments but invaluable mentorship.

2. Venture Capitalists (VCs): The Gatekeepers of Hypergrowth ??

Stage: When scaling becomes an obsession Expectation: Metrics, Traction, and Scalability

VCs are the sophisticated bankers of the startup world. These firms invest large sums of money into companies poised for high growth—typically post-revenue, when you’ve found product-market fit and need serious cash to scale.

VCs expect:

• A data-driven pitch. They're going to ask about your burn rate, customer acquisition costs, lifetime value, and a thousand other metrics you didn’t know existed.
• Clear evidence of a scalable business model. VCs don’t just want you to grow—they want you to take over the world.
• Exit strategy. How do they make money? IPO? Acquisition? Spell it out.

VCs typically come in with a significant stake, meaning you’ll give up a chunk of control in exchange for big bucks.

3. Convertible Notes & SAFEs: The Flexible Friends ??

Stage: Early stage, post-seed Expectation: Simplicity, Potential

When you’re not ready to determine your valuation but still need capital, Convertible Notes or SAFEs (Simple Agreement for Future Equity) are the instruments you need. They act as a loan that converts into equity when a future round of investment occurs.

Expectations here are:

• Straightforward terms that align with both parties. Investors don’t want to haggle over every line.
• Clear understanding of how the convertible element works and when it kicks in (typically during Series A).
• A company that has some traction but needs more data to set a definitive valuation.

This form of financing is favored by early-stage investors and founders looking for minimal complexity in negotiations.

4. Crowdfunding: When the Crowd Becomes Your Investor ??

Stage: Early or mid-stage Expectation: Public Buy-In, Virality

Crowdfunding is a democratized investment model where everyday people can invest small sums of money into your business. Platforms like Kickstarter or equity-based crowdfunding through sites like StartEngine allow you to tap into public enthusiasm.

When preparing for crowdfunding:

• Appeal to emotion and relatability. Your product must strike a chord with a broad audience.
• You’ll need a polished campaign, with videos, perks, and a clear articulation of why your project is worth supporting.
• Expect momentum. Crowdfunding is the snowball effect in finance. Early backers are crucial to give your campaign credibility, which then draws in more investors.

Crowdfunding doesn’t just raise capital; it builds a passionate, engaged user base.

5. Revenue-Based Financing (RBF): The Non-Equity Path to Growth ??

Stage: Post-revenue with consistent cash flow Expectation: Monthly Revenue Streams

In Revenue-Based Financing, investors lend money in exchange for a percentage of your revenue until a predetermined amount is repaid. This is an attractive option for businesses that want growth capital without giving up equity.

RBF investors expect:

• Predictable and growing monthly revenues. You’re essentially paying back a portion of your earnings every month.
• Clear financial projections that outline how and when they’ll get their return.
• A capital-efficient business model. RBF is ideal for companies with healthy profit margins and high recurring revenue, like SaaS.

This model is growing in popularity, particularly among SaaS companies, as it allows founders to retain full control of their business.

6. Family Offices & High Net Worth Individuals: The Silent Giants ??

Stage: Early or growth-stage, depending on the individual Expectation: Legacy, Stability, and Return

Family offices and High Net Worth Individuals (HNWIs) are more private, often harder to access, but can offer significant sums of money with less interference than traditional VCs. They care deeply about legacy—what their money will accomplish for the future.

These investors want:

• A long-term vision—they’re not just here for a quick return.
• A trusted relationship. It’s often about who you know that gets you the meeting.
• Evidence of stability—they aren’t generally looking for wild bets, but solid opportunities.

Securing money from a family office could mean you’re set for long-term growth without the cutthroat expectations of venture capital.

Bonus: Government Grants & Accelerator Programs: Free Money, with Strings ??

Stage: Early-stage Expectation: Impact and Innovation

Government grants and accelerator programs are excellent non-dilutive funding sources that don’t require giving away equity. They often focus on tech, innovation, or social impact startups. Expect:

• High-level innovation. Grants typically go to cutting-edge projects with significant potential.
• A strong community-focused pitch. Governments want to know how your project benefits society.
• Patience and paperwork. Grants are notorious for being slow-moving but are worth it if you fit the criteria.

So, Which Investor is Right for You?

The funding landscape is vast, and each investor type is a different puzzle piece. The key to success is approaching the right investor at the right stage in your business’s life cycle. Know your numbers, have a clear growth strategy, and most importantly, tailor your pitch to the audience in the room.

Remember, the best investor isn't necessarily the one with the most money—but the one who aligns with your vision, shares your timeline, and believes in your ability to execute.

If you'd like more insight into these fundraising avenues, check out this original post that inspired me: LinkedIn Post

Good luck! And may your investor meetings be filled with nods of approval and signature-filled contracts!