Before you go on a wild goose chase on your quest to raise capital, you should first understand how a startup investor's mind really works. Unfortunately, the majority of entrepreneurs get out there and try to raise capital for their startup venture without bothering to spend any time understanding what investors are looking for.

How they think

A startup business investor is a lot like you, only with a lot more disposable income. They pool together and raise capital from several high networth individuals to form a venture fund. This pool of capital is then used to fund the startup companies that make up the investment portfolio. Since the investments are diversified in this manner, a venture capital investor can afford to lose money on a single deal or even several deals, and still make a profit in the end if the other startups perform well.

As with any type of investor, a venture capital investor is looking to make more money with the money that they already have. Sure it's nice to have the luxury of existing capital, but managing these investments is a full time job. Unlike you, this is what they do for a living, not as a side job. Early stage investors spend a great deal of time weeding through new funding proposals looking for a great opportunity--and if the planets are aligned right, they might hit the next Google.

It's like Vegas (sort of)

In the meantime, only a few of the deals that they fund will make them any money at all--most will go bust. But, as with anything, the gamble usually pays off in the end if they make more good investment decisions than bad. That means that they can't afford to make many mistakes-- this is their primary source of future income and any mistakes will cost them dearly.

To help offset some of this risk, the majority of investors will do a great deal of research and analysis before funding any venture. They can't catch everything though! So, rest assured, any credible investment company is going to thoroughly check the facts before sending any money your way. You can count on answering some tough questions and hearing a lot of the word "No", before you find an investor that is willing to take a chance on your business.

Summary
	Before you begin the journey of raising capital for your startup, take some time to understand the mind of the beast (investor) that you are chasing. Investors are looking to make more money with the money that they already have. They take on a lot of risk and can't afford to make many mistakes. Be persistent and get used to hearing the word "no"!