Just as it’s vital for me as an investor to understand the team and how it will deliver on the promises made in the Business Plan, it’s also essential that you as an entrepreneur get into bed with the right investors.
Many people are simply looking for financial support to take their vision from dream to reality. But there are times when money is not enough to allow a business to blossom, and entrepreneurs can benefit from ‘smart money’. Here are four points that you should bear in mind when recruiting investors:
1) People who share your vision
A lot of investors – including me – wish to leave a positive impact on society by investing in fields such as cleantech and healthcare. As an entrepreneur, you should consider whether or not your proposition has such an angle and pitch to investors accordingly. Talk with your investors in detail and ensure that they know your sector and that their heart is in the right place.
2) People with more to offer than money
You have to know exactly the type of person you are looking for. For example: are you looking for a non-executive/executive director? Or do you want somebody with an extensive contact network and who knows potential customers or other investors? It is vital to find investors who have the right skillsets for your business. As an investor, it gives me great pleasure to introduce companies to high-level contacts when the opportunity arises.
3) People who are reasonable to deal with
Check out your potential investor’s online profiles, think of it as a formal recruitment process to ensure you will be happy working with that person. There are a couple of issues that you should keep in mind:
a) Character. Do the investors always play hard ball or are they reasonable to deal with? Do they understand your needs and circumstances? Of course you should put yourself in their shoes and try to understand their motivations.
b) Investment requirements. Make sure that you understand the investor’s desired return timescale. In other words, is the investor looking for a quick exit or does he want to invest in the business over a long time-frame? Is this a big deal for the investor, or one of a large portfolio?
4) People who will support and understand your strategy
Timescale and cash requirements often change based on strategic decisions and external circumstances. It is important to ensure that your existing investors can follow your business and stand behind you through times of change. Otherwise potential new investors may question and become suspicious of your business if existing investors are not supportive.
A good investor is worth more than the gold he bears!