It’s really hard to run a startup without money. However, it’s even harder with the wrong investors. Just like choosing your co-founders wisely is important, choosing your investors are important too. In the normal investor and startup cycle, investment is first obtained from the entrepreneur themselves, then followed by the famous 3 “F”s - Friends, Family & Fools. This is followed by a seed/pre-round or a grant (if you’re lucky). Then you get a round of angel funding, and maybe this is followed by several rounds of VC funding. If your startup is still alive by then, and still growing, you are finally either in acquisition territory, or IPO ready.
99% of startups don’t make it that far.
Everyone knows there are quite a number of key factors to “making it”. Part of this is executing well. Part of it is building a product or service that people actually need. However, all of this can be held back by poorly chosen investors and partners. Poorly chosen investors and partners can lead you down that path to startup death.
How do you know that someone is a good partner or investor?
These are three lessons I have learnt from running my startup for the past one year on good investors.
Firstly, they will back you to the hilt. They may have opposing ideas, and experiences, and will tell you why they don’t think something will work - but once you’ve made a decision - they will stick with you on it, and will not look back.
Secondly, they’ll be pushy, but not overbearing. They will push you, but won’t micromanage your journey forward. They won’t be chasing you every month or quarter asking for exact financials - they will just ask how the startup is doing, and what can they do to help?
Thirdly, they are willing to share and introduce you to their vast network. With the right investors - they will push your business forward - whether it’s a startup that needs to build the right relationships or whether it’s a business that needs anchor clients to keep it going. An investor who introduces you to others is invaluable.
Choosing an investor is hard. Learn from the example of others. This is why attending events such as the Startup Grind are important; you learn from the startups who have made it before, and you also might network with other startups who may have failed and learnt from them.
Don’t take the first “amazing” offer from an investor. Sleep on it. Think about it. Ask them more questions, and don’t accept ultimatums.
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