11What to Look For in an Investor
We've already covered ways to find prospective investors and how to convert them. But entrepreneurs who are serious about their startups know that not just any investor or capital source will do.
What should you be looking for in an investor? How do you hone in quickly on the best investors and stand out as a great match?
- Know who you do (and don't) want as an investor
- Know how to screen an investor
- Know how to converse with investors effectively and efficiently
Why Selecting the Right Investors Is So Critical
When you onboard an investor, that institution or individual becomes part of your cap table, and they are in for the long run. It is well known that divorcing your wife or husband is much easier than divorcing your investor. You need to be very careful with whom you are getting into bed.
Seeking the right investors is critical to get right, even for the smallest amounts of initial seed funding from friends and family. Just ask Mark Zuckerberg. And those initial investors are going to have a huge impact on who you will be able to attract for additional rounds of funding, and what those terms will be. So even if you are borrowing only $1,000 from a relative or classmate, make sure there is no lack of clarity on the agreement and that you aren't setting yourself up for heartbreak later on.
Deciding what's important in an investor or capital source at the outset helps founders streamline the process ...
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