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As an entrepreneur, you’ve probably heard the phrase “don’t just take any money, take the right money” at least once, if not more. The idea behind it is simple: when you accept capital from investors, you’re agreeing to a long-term partnership. Naturally, picking the right partners is critical to the success of your business, especially when capital is on the line. So what should you look for in people who invest in you?
The right investor will buy into the vision and will begin working with you to realize it from the beginning. This will likely mean suggestions and strategies for building your company even before you sign documents.
Investment in Your Growth
You might think that all investors are committed to helping you grow — after all, how else would they get a return on their investments? But some are more committed than others. How hands-on do they get with their companies? How much capital do they actually have to invest? Ideally, your investors are dedicating both human and financial capital to help you grow. Not all investors will, of course, but in that case, know ahead of time before you make a commitment.
Do your potential investors understand your market and the space you are operating in, at least on a high level? Can they take skills they have honed over their own careers in similar industries and apply them to help you build your business? Can they explain what you do and why it matters for the industry without extensive prepping from your team?
Industry experience isn’t necessarily a “must-have” for every deal, but some experience along with a basic understanding is important. Good investors should add value by providing actionable advice for growing your business and effectively communicating your value to other investors and partners as you expand.
Key Networks and Connections
Investors who can turn your cold leads into warm ones by tapping into their relationships are tremendously valuable. As you evaluate investors, ask if they are linked into the right networks — the ones that will connect you with the new customers, strategic partners, and talent you need to succeed.