

Tips on Choosing Your Investors - betashop
http://betashop.com/post/4990910632/10-tips-on-choosing-your-investors

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ares2012
I agree with some of the conclusions but not all of them. The following are
definitely true:

3\. Choose investors who are investing in you. 9\. Get references

Everything else is either derived from those (points 4, 5, 6) or are just not
realistic in the current world of start up investing (7, 8). Yes, it's
possible an investor will make a useful introduction or two but you can more
easily achieve the same end with an advisory board or personal networking.

While I would love to believe in "1. Choose investors you want to work with."
the reality is that unless you've worked with them before you will have no
idea what they are like. This is why getting references is so critical.

If you're going to pick an investor I recommend: 1\. Talk to at least one
company that investor (if a VC firm that particular partner) invested in that
failed. 2\. Talk to at least one company that investor invested in that
succeeded. 3\. Look at their portfolio and see how many companies that
investor is currently involved with. A lower company/investor ratio is better.
4\. Have an in depth conversation about the industry where you ask THEM
questions instead of them asking you. Turn the tables and make sure you can
learn from them instead of them simply learning from you.

Investors are investors. They spend their time investing which means that
their primary value will be their money. There are exceptions to this rule but
they are few and far between.

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betashop
Having started 4 companies I respectfully disagree.

If you treat investors as purely money, that's all you'll ever get from them.
In this market though there's tons of money out there. It's more important to
get smart money. And from my experience, it's just as important to get money
that you like to be with. I made the mistake once of taking money/valuation
over the person I preferred to work with and it haunted me for years having
someone on my board who I never really liked.

~~~
ares2012
I've started plenty of companies as well and there's a big difference between
smart money and people you like. There are plenty of investors that are nice
and friendly but are completely clueless when it comes to critical decision
time. Some of the most knowledgeable and effective investors are not the kinds
of people you would get a beer with at the end of the day.

I regret exactly the opposite decision - going with someone I preferred to
work with over someone who would have been a better board member.

