While many entrepreneurs believe in acquiring venture funding as early in the start-up process as possible, numerous companies have found success in wooing late-stage investors. However, entrepreneurs must understand that the process of attracting investors at the late stage, just prior to an initial public offering (IPO), is different from the steps that need to be taken by an emerging company. Early-stage investors are focused on refining the entrepreneur’s vision and perfecting the process or technology being developed. By contrast, late-stage investors expect to help companies scale up, not settle on a direction and build a foundation.
As a result, once companies enter the late stage, investors will expect them to possess a comprehensive understanding of their market, product, and plan to defend against and set themselves apart from the competition. Companies should also have identified the majority of their management team, pinpointed any gaps in their technological infrastructure, and set specific goals for scaling and growth. Late-stage investors can assist companies with matters such as moving into larger offices, expanding into international markets, and forging alliances and partnerships with other firms.