Checklist for Choosing an Investor

Finding suitable venture capital investors is one of the biggest challenges for the entrepreneur in a company's early stage. Not all money is the same. So, be very selective and try to find investors who would add not only money but also value to your business.

Although entrepreneurs may be hesitant to check out potential business investors for fear of possibly turning away committed funds, they must learn as much as possible about the person to whom they are selling part of their company. Every entrepreneur should ask:

  • Are the investor's motivations in line with what we can realistically offer?
  • Is the investor's personality compatible with mine?
  • Does the investor share the same goals I have?
  • When the investor says they invest in "startups", how exactly do they define a "startup"?
  • What other firms has the investor funded in the past? How did they turn out?
  • How active was the investor in those firms?
  • Did the investor make constructive contributions?
  • Did the investor stick with the firms in times of trouble?
  • What industries does the investor have experience in?
  • Does the investor specialize in particular industry or type of company?
  • How helpful will the investor be in trying to obtain future rounds of financing?
  • How many of the companies in which they have invested have completed successful IPOs?
  • Can the investor help provide contacts for distribution channels and executive search?
  • Does this investor have the expertise, contacts, and reputation to attract other potential investors?
  • Does the investor have a portfolio of competing companies?
  • With whom does the investor co-invest?

By: Vadim Kotelnikov


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