A short while ago, I was listening to the woeful story of an entrepreneur who had made the common mistake of taking on board the wrong investor.
The entrepreneur felt desperate at the time and accepted terms from an investor that seemed to be her only choice. She went on to regret the decision and, unfortunately, had to spend her entire life savings, and the savings of immediate family, to pay off the investor.
Now this is really unnecessary. If your investment deal is credible, and has a good team behind it and a compelling future ahead, you should really have a choice of investors.
Here are my “five Cs” to help you choose the right investor every time. And before I go any further, I’ll point out that you should never ignore number four, which is what the entrepreneur in my story did.
So, there are my top five Cs for choosing the right investor. I highly recommend that you tick off as many of these as you possibly can, so you can find not the wrong investor, but the ideal investor for your business.
Find out how to attract the right investors at my next event on 19th January 2017, 2pm-6pm, at the British Library's Business & IP Centre. Other dates are available. Follow me on LinkedIn, Twitter or Facebook for special offers and discounts.
The entrepreneur felt desperate at the time and accepted terms from an investor that seemed to be her only choice. She went on to regret the decision and, unfortunately, had to spend her entire life savings, and the savings of immediate family, to pay off the investor.
Now this is really unnecessary. If your investment deal is credible, and has a good team behind it and a compelling future ahead, you should really have a choice of investors.
Here are my “five Cs” to help you choose the right investor every time. And before I go any further, I’ll point out that you should never ignore number four, which is what the entrepreneur in my story did.
- Cash: it may seem obvious, but you want more than just the cash you need for one particular round of financing. Ideally you want the cash for the next round – or perhaps an unexpected round. And for the longer term, even enough cash to take you all the way to exit.
- Connections: You want an angel investor with connections. Cash is okay – we all like cash. But connections can be worth way more than cash in many instances – and if your investor has connections it will help you get where you want to go much more quickly.
- Coaching: It’s absolutely priceless to have an investor who is a great coach or a great mentor; one who can guide you and help you navigate through some of the difficulties you’re going to face. Someone who has been there before, who can be a useful sounding board for your concerns and ideas, and who can make your entrepreneurial journey feel less lonely!
- Chemistry: This is the one to be careful of. Make sure that the investor you take on board feels right to you. Trust your instincts and make sure that the chemistry is right between you. Do you feel you can get on in a harmonious way with each other – and will they get on with your team as well? Ignore this at your peril.
- Credibility: This is closely linked to number four. It’s all about asking yourself: do I actually trust this investor? Do others trust this investor? What is their reputation? Consider calling other entrepreneurs who have previously dealt with the investor, or consult other investors who know of them. It’s well worth your time doing due diligence on your potential investor - they’ll certainly do it on you - and they’ll respect you for it.
So, there are my top five Cs for choosing the right investor. I highly recommend that you tick off as many of these as you possibly can, so you can find not the wrong investor, but the ideal investor for your business.
Find out how to attract the right investors at my next event on 19th January 2017, 2pm-6pm, at the British Library's Business & IP Centre. Other dates are available. Follow me on LinkedIn, Twitter or Facebook for special offers and discounts.
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