How Different Investors Deploy Their Capital

A lot of the conversations I’ve had recently with founders looking to raise have told me that people seem very loose with their investor criteria.

I cannot stress enough how different certain investor groups are looking at investments, and how they must be treated extremely differently when approached.

Let’s break down the different motivations, time horizons, and reasons these different types of investors write checks - so you know how to approach them better when looking to raise your round.

All material below is our own anecdotal experience speaking with and working with these types of investors. Specific differences may exist.

Venture Capital (VCs)

VCs are in the fund return business.

They don’t care about your “great product” if it can’t get them a 10x+ return that moves the needle on their fund.

They’re playing a power-law game - one or two deals out of the portfolio carry the rest.

An advantage with this is that the capital from their fund needs to be deployed somewhere. So make sure it’s on you.

What to hit with them:

• Market size → can this be a billion-dollar outcome?

  • If your product does not have the potential to turn into at least ~ $200M opportunity, it probably isn’t worth going the VC route

• Defensibility → moats, network effects, IP.

• Growth velocity → fast enough to justify the risk.

• Syndication → are other credible investors backing this?

Translation: VCs aren’t buying your product; they’re buying your potential to return their fund.

Family Offices

Family offices aren’t looking to gamble their wealth away.

They already made their money - now the game is preservation with selective upside.

What they want to see:

• Clear downside protection (how does this not go to zero?).

• Aligned with their values or industries they know.

• Long-term vision - no artificial 10-year clock like VCs.

• Transparency on use of funds.

Translation: Family offices care about trust and stewardship as much as IRR. They’ll pass fast if they feel like you’re cavalier with capital.

Corporate / Strategics

Corporates don’t invest because your deck is pretty.

They invest because they want optionality. Either you’re a future acquisition target, a distribution partner, or a threat they want to neutralize.

What matters to them:

• Strategic fit with their core or future roadmap.

• Access to your IP, talent, or distribution rights.

• Early “inside track” on M&A.

• Keeping your tech out of competitors’ hands.

If you’re building something in a competitive industry that could be a threat to large players, corporates could be a great route for you.

Translation: This isn’t about financial return. It’s about corporate chess. Pitch them like a partner, not like a VC.

Angels

Angels write checks with their own money. It’s more emotional.

They back founders they believe in and stories that excite them.

What wins with them:

• Your personal conviction and credibility.

• A simple instrument (SAFE, convertible).

• Social proof - who else is in?

• The fun factor - some angels just like being part of the ride.

Translation: Angels bet on you, not your spreadsheet.

The mistake most founders make is pitching every group the same way.

Be careful in who you’re approaching, what their motivations are / what they’re going to be looking for, and make sure you find an investor who is aligned with the vision you have for your company.

If there’s any specific ideas from this newsletter you want to hear about, shoot me a reply.

Ryan
Breakout Capital Group