Founders spend months pitching investors and very little time checking who they are. In a new piece for EU-Startups, Angel Investment Network founder Mike Lebus explains how founders should research investors without putting them off, and why it gives founders their time back.

According to our last founder survey, around a quarter of you are spending more than half your working week on fundraising, yet only about one in three are do any serious research on the investors you are approaching. Before you start approaching investors, consider how to research them thoroughly to identify who is the best fit.

That gap is the subject of Mike’s latest column for EU-Startups. Investors examine a founder’s model, contracts and career before they commit. Few founders return the favour, and Mike argues the cost shows up twice: in months spent pitching people who were never going to invest at their stage or in their sector, and in years spent inside a partnership that never suited either side. Taking time to understand how to research investors may ultimately help avoid these mismatches.

A tighter market raises the cost of the wrong backer

The obvious objection is that founders cannot afford to be choosy. Money is harder to find, and it takes nerve to question an investor who is ready to commit. Mike’s view is that this is exactly when the checks matter most. With less capital in the market, a bad investor is harder to replace. It echoes the point angel investor David Pattison made when he told AIN that choosing the right investors can make or break your business. Knowing how to research investors can reduce these costly mistakes.

What founders should check before they pitch

Mike says you should start with what you want from each backer: in a round of ten angels, you may want two or three actively involved and the rest silent, and the depth of checking should follow the role. Then confirm the basics. Is the investor who they say they are, and do they write cheques at your size and stage? This is why you must prioritize how you research investors during your fundraising process.

From there, look at track record and sector experience. Being out of scope remains one of the main reasons startups are turned down, a point Future Planet Capital’s Alex Leigh made in his Meet the Investor interview with AIN. The final tests are softer but no less important: whether you get on, and whether you share a view on timeframe, growth and exit. Serial founder turned angel Byron Crellin calls this investor founder fit, and it rarely gets the attention founders give to product market fit. For those wondering how to research investors with these softer signals in mind, direct conversations can help spot alignment.

How to research investors without putting them off

Most of the work never reaches the investor. LinkedIn, company websites and public registers such as Companies House and the European e-Justice Portal cover directorships, filings and past ventures, and cost the investor none of their time. The most useful signal, Mike argues, comes from founders the investor has already backed. It’s useful to remember that researching investors should involve talking to other founders about their own experience dealing with the investor.

The column also covers where AI tools help with investor due diligence and where they fall down. When Mike tested one on an investor he knows reasonably well, it turned up something he would never have found himself, though common names can send the same tools badly wrong. By embracing digital tools, founders can streamline how to research investors more efficiently.

None of this adds a stage to an already long process. It removes the wasted ones.

Read Mike Lebus’s full piece on EU-Startups. Once you have found the right investor, our top 10 tips for negotiating with investors cover the next step.

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