How to Find Your “Soulmate” Investor

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When you’re looking for funding, it’s good to be a woman in a man’s world. By Tanya Marvin-Horowitz (NY Managing Director, Allegiance Capital Corporation)

At some point, your startup is going to need outside investment. You’ve got the ball rolling, the future looks bright, but you need to get your hands on some growth capital to take it to the next level.

And by next level, I am referring to the capital that will expand or restructure your operations, enter new markets, offer expanded product offerings, or acquire your competition.

Depending on the size of your company and your growth objective, you might be looking for angel investors, venture capital firms, private equity groups or a strategic investment – but the question is the same no matter what kind of financing you’re going after. You’re trading away an ownership stake in the project that has been consuming your life.

How can you be sure you’re picking the right partner?

If that sounds like a marriage, that’s because it is. You and the investor are bound together, and your business is the baby you’re trying to bring to adulthood. So you don’t want to jump into bed with the first investor who comes along offering the right amount of money. You’re also looking for that elusive spark of chemistry that tells you you’ve found your business “soulmate.”

As an investment banker in the lower middle market, I represent company owners who are looking for capital. Putting the right investor together with the right owner is my stock in trade.

In this process, I’ve found that many of the women business owners I represent intuitively understand how pivotal it is to have that chemistry. When you need a financial partner, a relationship-driven approach is a huge asset.

These are the questions I remind my clients to keep asking:

Do these people share my vision?

You know where you want your startup to go. In your wildest flights of fancy, your kayaking software (let’s say) is going to be the go-to app for professional kayakers worldwide. Are your investors on board? If they think it would be more profitable to stick with a North American customer base, or to target amateur kayakers rather than professionals, you’re going to have a problem.

Do these people share my values?

This is also known as the “Ben & Jerry’s” dilemma, after the highly socially-conscious ice cream company, who sold to Unilever in 2000. Most company owners have a mission that’s about more than just making money. Maybe you feel strongly about providing free daycare in your offices, or you regularly partner with a non-profit that preserves the best kayaking rivers.

In either case, you wouldn’t want to sell an ownership stake in your company to someone who would prefer to cut that expense to boost the bottom line.

Do I want to have a cocktail with them after work?

The opportunity to suddenly have an infusion of cash can turn your head. Don’t let that dizzying number on the contract distract you from asking yourself whether you actually like these investors as people. You don’t have to braid each others’ hair at sleepovers, but you’re going to be working very closely with them.

Yes, the numbers matter. The financing and the terms of the investment need to match what you’re looking for and what your company needs. But having the right chemistry is critical, and sometimes women business owners can have an advantage in spotting it. Use your gut, ladies. After all the tough deals I have been through in this business, I can tell you that this is one place where women’s intuition works!

Editor’s note: Got a question for our guest blogger? Leave a message in the comments below. Photo credit: Gabriela Pinto on Flickr. About the guest blogger: Tanya Marvin-Horowitz is a Managing Director at Allegiance Capital Corporation in the New York office. She is an accomplished investment banker with over 18 years of experience guiding clients through complex investments and M&A opportunities. She has worked for investment advisory firms, as well as numerous HNWIs, family offices, private equity, and other institutional /corporate investors. Her experience spans both domestically and internationally.