17 Jan 2020
Why choosing the right investor partner could be crucial for your Start-up?
Bringing on board the right investor partner can be one of the most important decisions you make as an entrepreneur. While raising funds is not easy and many times you may not have a choice of the investor you get money from at a time when you need it the most, researching the investors you are approaching for capital is important. In this article I would like to highlight the impact an investor can have on your business especially at a stage when you want to approach early stage investors in India.
- Bring their network: The venture capital world operates within a network with a large number of deals being doing in syndication. Understanding how investors work together in this ecosystem is important, as each investor bring with them their own network of entrepreneur and investors, who would be valuable as you expand your business and also go for future rounds of fund raising.
- Bring in unique value adds: While most investors prefer to let founders drive businesses, I’ve seen several entrepreneurs value the inputs and connections that investors bring on board in terms of better accountability, processes and cross-learnings from other investments.
- Develop a unique equation of trust with the entrepreneur: Most investors for the startup business world want to be an entrepreneur’s investor. They want to work in a manner that is friendly for entrepreneur lead ventures, where founders are given enough space to grow the venture as their own, while being accountable for agreed milestones. Many look at it as a coaching relationship also. However, as you develop the relationship with your investor, it is important to have transparency and trust as some good values to hold on to. Because even though you may not agree on everything, having a process to come to an agreement in areas you don’t see eye to eye on, and being on the same page on the big goals of the company are important.
After all, we have seen enough cases of ventures going downhill or getting bad publicity due to avoidable investor-founder conflicts.