Selecting the Right Investor

When you start up a business, one of the first missions is to locate investors who will provide funding that will enable you to meet your company goals. An owner who wants a company that will survive in the long-run will need financing in one form or another. There are many different types of financing available and they will all have their own particular strengths and weaknesses. In a perfect world, you are going to settle on investors that will be with the company for the long haul and where your ideas and goals are on the same page. These are some of the considerations to keep in mind when looking for investors.

Your investors need to have an aligned vision with your goals for the company. While obtaining the money is important, the long range viability of the business is best served when the investors have the same passion and vision of the owner. It would be ideal if you came to an agreement with the investors of the company goals and where they should be in a few months or years. These key points and others need to be thoroughly talked about between ownership and the potential investors.

It is not a good idea to take anything for granted where potential investors are concerned: check out their history. Find out who they invested their money with in the past and discover the results of that investment. Ask questions about the actions of the investor when things were going well for their other investments and also when they hit rough times. Check with the original owners of the other companies the investor financed and don’t be afraid to ask the tough questions. One thing you do not want to do is sign on with an investor who flees at the first sign of trouble.
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You cannot discount the experience a veteran investor may bring to your company. When looking for investors, consider their expertise in business as well as their financial resources. An investor’s involvement in other enterprises may make the difference for your company if you run into problems down the road. Find out how successful an investor was able to work with a company when the going got tough. Someone who lent a guiding hand to steer the business through rough waters would be great to have onboard.

Ideally when looking for an investor, you want someone who can be active on your board in helping to guide the company on its mission. There are many investors willing to listen to your pitch, provide funds if they believe in your idea, and then sit back and wait for the return on their investment. You should look for investors that are willing to go beyond this and ready to actively give their time and experience towards the successful running of the company.