A few weeks ago Kera (head of marketing at Hustle Fund) got this question from a reader: 

“Why would a founder want to raise from VCs or angel investors who don’t know their industry?”

The concept here is that investors who aren't experts in a given field wouldn’t add any strategic value to startups in that field… the investors would just be “dumb money”.

I mean, I get it. If I was raising money for a B2B finance tool, I’d prefer to have a lineup of investors who were experts in fintech.

The benefits are obvious. Investors who are experts in your field...

• know other players in this space
• can offer insights into the product
• can share valuable lessons from their own experiences in the industry
• know the regulatory considerations specific to the field

Then I read Kera’s response. And my perspective changed. So, I thought I’d share it with The Founder Playbook audience because our readers (you) might be wondering the same thing.

Here is her email response in its entirety. Edited lightly for readability. 

“The truth is that many investors – especially angel investors and VCs at the pre-seed and seed level – are generalists. They know a little bit about a lot of topics but aren’t experts in any of them. 

So they need conviction that the founders they're backing are the experts. 

The founders must have unique insights into the industry, the problem they're solving, and the customers they're serving. Educating an investor on why this is a big problem, and why this is an audience worth serving could unlock critical investment. 

Of course, there are always investors who are experts in an industry. You'll find them in every field if you look hard enough. 

But many founders don't have the luxury of only accepting checks from investors who fit that description.

And while an investor may not be an expert in an industry, that doesn't prevent them from adding any value whatsoever.

I'm a generalist, for example, and I regularly meet with our portfolio to help with their messaging, lead-generation strategies, email marketing strategy, virtual events, etc.

Other teammates are proficient in:

• setting up automation
• building out a sales team
• building a product roadmap
• developing a GTM strategy

We help with: 

• fire sales
• setting up SPVs
• navigating co-founder drama 
• pitch deck support

Not to mention the boatloads of introductions we make to other investors, prospective employees, and strategic partners. I see this support occur literally on a daily basis. 

Investors outside your industry can offer fresh perspectives and different networks. You’ll also probably see fewer conflicts of interest. 

And worst-case scenario? A "dumb money" investor can write a check. While more support would be ideal, an investor who's not annoying or mean or disrespectful is a huge value add to a founder's runway.” 

Almost all our content ideas are derived from conversations with our readers. So if you have a question on fundraising or scaling your startups, hit reply and let us know!