Business Lesson #29 -- Pick your investors carefully!

The are so many things to think through when you are taking money from professional investors. And I don’t mean deal points, but those are very important too. Some of the questions that you should ask yourself are: 1) would I enjoy working with the investors? 2) do the investors have large enough funds to support the company, if needed? 3) is this the investor’s investment the first investment, the last investment, or something else in the fund?, 4) who will represent the investor(s) on the board?, 5) can I trust the investors to do the right thing?, 6) do the investors share similar values, beliefs, and philosophies as you? 7) can the investors be helpful to you?, and more.

It is critical you pick your investors carefully! Picking the wrong investors can often be the difference between success and failure.

You should know that investors have a job to do — which is deliver returns to their investors. So, while they may act like they are your friend, they are not. Don’t be fooled or confused. Never forget this. Investors are always trying to gather information about how things are going to mitigate their risk.