According to LinkedIn, there are around 133 million businesses that are started across the globe every year. Whether you’re looking to create a local or global company, choosing the right investors may be the most critical decision any entrepreneur can make, even more important than buying the right home or office space among Albuquerque, NM real estate, or wherever you happen to be. In fact, some say, it’s like getting married, only it’s not as easy to get divorced.
It’s Not Just About the Money
While your first thought is probably focused all about the money, closing the deal and cashing that check as soon as you can, you need to think way beyond this as you’re choosing a partner, not just the money that partner brings. You need someone who believes in you and your vision and understands the challenges that lie ahead, as well as having the business acumen to help you achieve success. You’ll also need good rapport, with a mutual level of respect – is this someone you’d actually want to spend time with, both professionally and personally? Be sure to ask yourself how the potential investor’s vision for the company differ from yours as well.
Assess the Investor’s Commitment to You
How much time and commitment does the investor have for you? You should be able to turn to them when you need to – if their time is stretched too thin, they may not be available for frequent interaction which is often needed in the early stages of a startup. You need partners that can offer guidance without challenging every decision you make – the right choice can help you manage your infrastructure and capital while allowing you the freedom to build your business.
The Right Expertise
You want to be sure the investor has a proven track record, preferably one that’s directly related to your particular industry and business model. Again, you want something significantly more than cash in an investment partner – someone who can not only be a willing backer, but a wise mentor that can help your business thrive.
Going Beyond Traditional Reference Checking
Traditional reference checking probably isn’t going to be very helpful, as anyone that gives you a reference is only going to give you someone who will say positive things. The best investors aren’t afraid to share both situations that have gone well and those who haven’t met expectations – if they don’t, be sure and ask for the names of those founders and CEOs. Everything doesn’t always go well 100% of the time and you’ll find out more about your partner’s character from how these situations more than anything else.