When it comes to finding an investor, it’s not just about the money
The most successful investments rely on forming the right relationships, so figuring out what kind of investor you want in your corner is one of the most important decisions for the future success of your startup. All too often, the person with the money is the person in the driving seat. But if you’re seeking financial backing you should absolutely question whether they’re the right fit for your business.
I’m fairly hands-on in that I’m not the type of investor who hands over the money and then disappears. And while I don’t get involved on a day-to-day level, I feel it’s important they know they have support. That said, not all investors are the same and every entrepreneur or team will want something different from their backers. These are some of the things entrepreneurs should consider when talking to investors.
Hands on, hands off
It’s often said that when you take someone’s money, you’re also inviting them to share their opinion. At the beginning of the investment process, you should ask yourself if you want an investor who never calls and lets you get on with things. You should also consider what support they’ll give you, the kind of connections they’ll bring and their level of expertise in your industry. Knowing exactly what support you want can save a lot of trouble further down the road. Make sure that any agreement sets out clear parameters and expectations too.
Can they plug any skills gaps?
Take a hard look at your business model and your own capabilities. What gaps could an investor fill in terms of skills and knowledge? Finding a partner to plug those gaps can be just as important as the money they bring – especially if the reasons you’re being held back as a business aren’t purely financial. It may be obvious but be sure to look for an investor with a proven track record as well as a strong understanding of your industry and business model.
Entrepreneurs can often become emotionally invested in their businesses, which can make it hard to make objective decisions. Having an investor who acts as a confidante but can also step outside of the business to make those decisions is important. Being able to see a different point of view when analysing an idea or a problem can make all the difference when it comes to pushing your business forward and becoming a success.