How can start-ups identify good investor or funding prospects?

Depending on your stage of investment, the most common practice is through founder/owner immediate circle (family and friends) and professional / industry networks (that understand your venture and feel comfortable with underwriting the risk).  Once your venture gains traction, and you need to target institutional investors, you can begin to approach sophisticated investors via direct introductions, angel groups, or specialized online platforms (crowdfunding).  Also, there are a number of specialized (some free) databases that can help to source a list of investors in your space.  One challenge, however, is to identify investors that will become partners and will facilitate introductions, and could potentially lead future financing rounds for your venture.  CEO/founders should invest upfront time to think through their capital raising strategy and validate their different options before taking money from investors.