How to Use LinkedIn to Find Potential Investments

LinkedIn is a great place for you as a potential investor to look for your next investment. Maybe someone in your VC firm needs to connect with someone in a particular industry, or perhaps your organization wants to invest in an emerging market or new technology. LinkedIn has resources for you.

Look in your network

One of the benefits of a good investor is the network he brings with him to the investment. Although some venture capitalists recommend their own executive and/or board structure to their investments, other investors simply offer advice about any new hires or support personnel a new company may need in its growth phase.

Sometimes, the right investor knows a new company’s customer base well and can help the new company land a key account. This is all possible through a strong network, which makes LinkedIn one of the best ways an investor can grow and strengthen his network. Here are some ways that LinkedIn can help:

  • Monitor your network activity. Your network is always working, and this point is clearly demonstrated in your network activity. Spend some time every day or week to look through your network activity to see which of your contacts has changed companies, started new projects, or participated in groups you may find relevant.

  • Monitor LinkedIn Groups and Influencers. See what topics show up most often in your particular industry, and what comments other people are posting. Pay attention to channels like Entrepreneurship & Small Business, VC & Private Equity, and Technology.

  • Identify thought leaders. As you watch your network, LinkedIn Influencers, and any relevant LinkedIn Groups, pay attention if certain names keep popping up. These people could be thought leaders in your intended industry and they are worth connecting to in order to stay ahead and scope out the best opportunities. Reach out to these parties through introductions or InMail to see whether you can create a meaningful connection.

  • Strengthen your network. Build good contacts in your field through regular networking and avenues like LinkedIn Groups. Identify people in your network who are a part of your desired industry and expand into their networks by getting to know their connections.

Do your due diligence

As new proposals for investments come your way, or you meet an entrepreneur in one of your industries who could come to you later with an investment proposal, you have to evaluate these proposals and decide how to proceed. Here are some ways that LinkedIn can help you filter all this incoming information:

  • Evaluate your entrepreneurs. When you’re evaluating a proposal, do some research by seeing whether the requester has a LinkedIn profile. Compare notes between his business plan and his actual profile. Evaluate his entire management team.

  • Ask for endorsements. If you’re evaluating a proposal or contemplating adding someone to your network, see who in your network knows this person (or company). If you find a connection, ask your connection whether she would endorse or recommend this person.

  • Get a sense for your intended market. See if any relevant LinkedIn Groups exist for your intended market on LinkedIn, and, if so, what discussions or activities are happening in those Groups. Search the LinkedIn Companies directory to see whether the requesting company has been profiled. If so, take a close look at the information.

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