How to Use LinkedIn to Find Potential Investments

By Joel Elad from LinkedIn For Dummies, 2nd Edition

LinkedIn is a great place for you as a potential investor to look for your next investment. One of the benefits of a good investor is the LinkedIn network he brings with him to the investment. Sometimes, the right investor is someone who knows a new company’s customer base well and can help this new company land a key account. This is all possible through a strong LinkedIn network. Therefore, LinkedIn is 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 contacts of yours have moved companies, started new projects, or participated in questions you may find relevant.
Monitor LinkedIn Answers. See what questions people are asking in your particular industry, and what answers are being posted by other people. Pay attention to question categories like Starting Up, Venture Capital and Private Equity, and Business Plans.
Identify thought leaders. As you watch your network, LinkedIn Answers, and any relevant LinkedIn Groups, pay attention if certain names keep popping up over and over again. These people could be thought leaders in your intended industry —people who everyone respects as the authority in their given subject matter — 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 now and in the future.
Strengthen your network. Build good contacts in your field through regular networking, and avenues like LinkedIn Answers. Identify people in your network who are a part of your desired industry and expand into their networks by getting to know their connections.

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. See how he contributes to LinkedIn through Q&A. Evaluate the 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. Ask questions about the intended market on LinkedIn Answers. Search previous questions to see whether the requesting company has been mentioned or profiled. If so, take a close look at the information.