OPINION: How founders can stop wasting time on fundraising

Founders who have raised capital know the investor due diligence process from the other side. Investors conduct due diligence to make a long-term bet on founders' abilities, but in reverse, founders often lack knowledge about the investors approaching them. DocSend's research found founders contact an average of 71 investors for a pre-seed round, and a quarter spend more than half their week on fundraising.

Of these, only about one in three conduct proper research on investors. This can lead to time wasted pitching investors who aren't a fit and potentially years of a misaligned relationship. The market has made founders less likely to check investors, but when capital concentrates in fewer deals, investors hold more leverage. Founders often feel they can't afford to be picky due to fierce competition.

However, research shows that due diligence upfront is crucial. Knowing an investor's criteria and track record helps determine if an approach is worth a week of a founder's time. Investors' criteria include their role (active or silent), level of investment, stage, reputation, and sector experience. Investor-founder fit is also important, as it determines whether both parties share the same goals for the company.

Founders can gather this information through LinkedIn, company websites, and European e-Justice Portal. Speaking to companies an investor has backed can provide valuable insights. Using AI for initial research and human judgement for final decisions is recommended. Trusting instincts and seeking a second opinion can also help avoid wasting time on unsuitable investors.