Guides · Finding and targeting the right investors
How to Build an Investor Target List From Scratch
Most people start a target list by collecting names. I think that is backwards. At Family Office Club we hear from about 6,500 people at our events each year, and the ones who struggle usually have a long list and no clear picture of who belongs on it.
A good list starts with a narrow investor type, a realistic check size and a reason each person would say yes. Here is the order I would follow if you had nothing today.
- 1Define your investor avatar first
- 2Match investors to your stage
- 3Score names on three trust curves
- 4Find investors with exits in your space
- 5Build a database from Inc lists
- 6Go where your investors already are
Step by step
Step 1. Define your investor avatar first
Before you collect a single name, decide who you are writing for. In our Rainmaker series, investor demographic targeting comes right after mindset, and branding and your one-liner come after that. They stack on each other. If you skip the avatar, who is the one-liner written for? Get specific about the needs, cares, headaches and worries of the exact investor type you want. Your offer should fit that person too, since most competitors copy what everybody else offers. Write the avatar down in a few lines. Every name you add later should match it.
Step 2. Match investors to your stage
Your stage decides which investors make the list. At the startup phase you are not targeting institutional investors. You usually need to reach 70 to 100 million, maybe a couple hundred million, before the institutional route makes sense. Many people start with friends, family, angels and private investors. Family offices are the middle ground. They can write middle sized checks of 1 to 3 million, 5 to 10 million, and 25 million and up. Pick the group that fits your raise today and build the first list there.
Step 3. Score names on three trust curves
For each name, ask how far up the trust curves they already are. Do they trust you and your team? Do they understand your industry? Do they understand the opportunity at hand? Someone who always invests in self storage, or has used a storage facility, learns faster. Someone local to the opportunity may move quicker too. I would not target anyone starting at ground zero on all three. That is why people start with friends and family. Then you walk into each meeting knowing which curve you need to move that investor up.
Step 4. Find investors with exits in your space
Look for people who have already built and sold something close to what you are doing. If you are raising for a mobile app, find people who had exits in technology or in mobile apps. They can add more than an allocation. We have seen them add strategic input, source deal flow, make connections and help with distribution. Investors like this can be more useful than a generic wealthy name. Mark these people as priority on your list and note what you would ask them for beyond a check.
Step 5. Build a database from Inc lists
Here is a practical way to build your own custom database. Go to Inc magazine's website and pull the Inc 500 and Inc 5000 lists from the last 12 years. Give that historical data to a data worker on Upwork. Ask them to build a database of companies in your space that grew over time. If a company did 30 million dollars in revenue 10 years ago, you can look up what happened to it. Many likely had exits. Their founders can become a list of local and well qualified investor prospects. Also look at who sits on boards of publicly traded companies.
Step 6. Go where your investors already are
The longer term approach is to flip the question. Learn your target investor so well that you know where they congregate, which associations they join, what they read, which newsletters they follow and which podcasts they hear. Then be in those places. Also ask how they would find you when they search for something like the best biotech investment funds. There may be angel groups focused on healthcare, or magazines they follow. If your niche is too small, you can always zoom out half a layer.
Step 7. Build trust before you pitch
Wealthy people are usually not very visible. Many keep a low profile because they do not want to be targeted all the time. So do not chase names with a pitch. At our events I see people for the fifth time, and they walk up and hug me instead of shaking my hand. That comes from showing up again and again. When you do talk deals, be honest. If it is your first fund, say it is your first fund. Share the risks you have thought of and how you would handle them. Many sponsors talk to a securities attorney about how to approach conversations on an offering.
From my talks
"You shouldn't go into any meetings or be targeting any investors who are starting at ground zero, not knowing who you are, not knowing your industry."
"Know your target investor so well that you know where they congregate, where they often go, what associations they're members of."
From my books and event talks
Once you know your investor type, treat the list as a universe you can size. If your niche has 280 dry cleaners or 800 stem cell companies, build a database of that whole universe, get the contact details, figure out the asset owner and work that list in a system. I also suggest two investor demographics. Give a main one 60 to 90 percent of your energy, then run a secondary one as an experiment. If it grows legs, you expand it. If it does not, you have lost very little.
"So how could you build a database of the 280 dry cleaners, or the 800 stem cell companies, or the 52 pieces of real estate in your niche? You know, suburbs of whatever real estate space you're looking at and build a database of that universe so you can get their contact details, figure out the asset owner, and then work that list in a system."
"You may want to have two different investor demographics you target: a main one for 60 to 90% of your energy, then a secondary one that's an experiment, and you see if it grows legs and expands."
Mistakes to avoid
- Collecting hundreds of names before you have defined the exact investor type you want.
- Targeting institutional investors when you are still at the startup phase.
- Pitching people who start at ground zero on you, your industry and your opportunity.
- Treating every investor as just an LP and ignoring people with exits in your space.
- Chasing wealthy people with pitches instead of building trust over repeated meetings.
On the record
- Family offices can write checks of 1 to 3 million, 5 to 10 million, and 25 million and up.
- Startups usually need to reach 70 to 100 million, maybe a couple hundred million, before going the institutional route.
- Inc 500 and Inc 5000 data from the last 12 years can be turned into a custom investor database by a data worker on Upwork.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Capital Raising FAQ Webinar, Capital Raising Frequently Asked Questions Webinar, $100M Rainmaker Series | Summary. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around investor eligibility rules, offering communications and offering documents. Do not use AI to write your own legal agreements.
Questions about this guide
Who should be on my first investor target list?
Start with friends, family, angels and private investors who already trust you or know your industry. Family offices come later, once you can show a track record and a larger check size makes sense.
How can I find investors in my specific industry?
Look for people who had exits in that industry. One method I like is pulling the Inc 500 and Inc 5000 lists from the last 12 years and having a data worker on Upwork build a database of companies in your space.
What check sizes do family offices usually write?
They can write middle sized checks of 1 to 3 million, 5 to 10 million, and 25 million and up. Some allocate almost like an institutional investor.
Related questions
- How do I close a funding round?I close a funding round by focusing on investors who fit the opportunity and moving each interested prospect through clear, consistent follow-up.
- What documents do investors request during due diligence?Prepare a clear, organized package covering your operations, investments, compensation, team, and track record.
- How do I raise capital for my business?I raise capital by building a repeatable system for attracting the right investors, establishing credibility, and developing relationships before asking for money.
- How do I raise money with no track record?I would raise money without a track record by focusing on credibility, relationships, and evidence of my ability to execute.
Use the one-liner builder alongside this guide.