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How to Launch a Startup and Not Lose Money by Working with Investment Intermediaries

Column of the founder of the POSTOPLAN cross-posting service Alex Bozhin.

In the first rounds of attracting investments, private intermediaries come to the startup offering to take over the seeking funds. Such offers always sound quite good, but more often, hiring agents is ineffective or even hurting business. In this article, you’ll learn why it is better to look for investors on your own. 

The NSBA study has shown that one of four startups stop growing because they cannot mobilize the necessary funding. Most often the business fails in the second to the fifth year of existence. According to various resources, 10 to 30% of companies survive.

Why does this data matter? Startups face the highest risk and highest failure rates early on. For founders who don’t have similar product development experience, this is doubly important. At this stage of every startup life, intermediaries appear to attract investment with an amazing offer: to find investors for your product.

What do intermediaries offer?

Taking on the role of a buffer between business and investors, players occupy a huge part of the venture capital market. Investment intermediation exists in different forms: brokerage, investment platforms (API), and investment agents. I am sure there is a separate and effective strategy for each type of intermediation, but most often companies are faced with those who don’t provide significant benefits to their business. Let’s talk about them. 

Such intermediaries can use a variety of ways to find you: in the business angel communities, the leaked bank client databases, or on a case-by-case basis. From my own experience, they can offer very different assistance, but most often they offer as follows:

  • For your money, we will tell you how to present your product to investors.
  • Pay us and we will show you to potential investors.

What’s the catch?

When dealing with startup founders with no product launch experience, I faced two myths about how intermediaries work. Many people feel that they have access to some special investor database and will present their product in a way that they will never be able to. In fact, most market players use much more trivial methods.

They send cold emails to the investors. This approach can work under the law of large numbers, or it can only anger the investors. According to NFX study, 17.5% of investors recommend startups to keep away from cold email campaigns.

They have no specific knowledge of how to present your product. But there is one caveat: this statement doesn’t work if an intermediary is the investor’s investment agent. In this case, they know what a particular angel or foundation pays attention to and can suggest which numbers to focus on. In other cases, the startup itself can tell much more about its product: only you know all the details, features of statistics, workflows, and compliance with the plans.

A bad-faith intermediary can ruin your relations with investors even before you meet with them. Unfortunately, poor awareness of your product and cold mailing annoy investors almost as much as spreading yourselves too thin during the negotiations. In my practice, there were cases when an intermediary wrote to those angels with whom I had already negotiated. You need to remind yourself regularly, but it’s bad when different people do it. This proofs dissonance in your team. 

How do I work with intermediaries? 

I’ve experienced poor performance from intermediaries and can draw many disappointing conclusions. However, it is important not to rush here. I’ve also dealt with professional intermediaries who have contributed to fundraising. To avoid mistakes and insure yourself against unreliable performers, just prepare a plan for working with intermediaries: 

  1. Pay only for the result. Many intermediaries work only for a monthly fee. This may lead to extending rounds ad infinitum and work for nothing. Draw up a commission agreement and specify that payment will be due only upon attracting investments. According to other startup’s estimates and my own experience, the average commission among Russian-speaking intermediaries is two to five percent.
  1. Review the portfolio of projects in which the intermediary was involved. No one will share the investor database with you, but a project portfolio can shed light on whether a person has dealt with similar products.
  1. Don’t stop searching for investors. No matter how good an intermediary is, you have to delve into their work. Don’t shift all the investor attraction tasks onto their shoulders, so you won’t contact the same angels.
  1. Keep looking for investors on your own. Think of an intermediary as an additional channel that can either work or fail.

How can I look for investors on my own? 

List the angels in your target market.

Almost all people who invest money on a regular basis are famous. There is no common investor database, but you can compose your own list, analyze the investment portfolio based on public information and highlight those who are potentially interested in your product.

If you already have angels, feel free to contact the foundations.

In the first rounds of attracting investments, this doesn’t make much sense, as the foundations are suspicious of companies without private investors. However, if you’re already working with angels and demonstrating growth, contact the foundations. If cooperation is failed in the first round, you can find those who will pay attention and monitor your progress.

Use investment platforms.

Stay alert! Their main disadvantage is that there are many intermediaries with whom it is better not to work. Nevertheless, angels are also registered there. We attracted our first private investor precisely through one of such websites.


At the start of your business, the only reliable option for attracting investment is independent work with potential beneficiaries. Anyway, to make a first contact, it is better to go to social networks or directly by phone, if there is such an opportunity.The pitfall of digital communication is that investors often rate the founders based on their Facebook and LinkedIn profiles. The founder’s personal brand in the digital space is of course a separate topic for this article. Still, it’s important to ensure that your personal pages look properly, post content regularly, and update information. Since the CEO’s time does not always allow them to do it on their own or to do it on a daily basis, services for delayed posting on social media, like Contenive, are very helpful in this regard.

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