What Your Business Startup Should be Looking for in an Investor

by | Aug 21, 2014 | Financial Services

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Many entrepreneurs looking for funding for their startup business feel they can’t be choosy about where it comes from. They believe that if they need money, who are they to turn away anyone who is offering it to them? This is understandable, but ultimately flawed reasoning.

The truth is, investors will only put money into your business if they feel it’s going to be worth their while. If they see something that excites them, and which they feel is going to give them a good return on their investment. You need to use this to your advantage. You want investors fighting for a share in your business. Make them feel they need you as much as you need them.

So how do you go about finding suitable investors for your startup?

There are two sides to this coin. It is important to find someone who understands your business or your industry, and who is passionate about what it is you’re doing. Ideally, look for an investor with a portfolio full of businesses similar to yours.

Having investors who are experts in your industry, and whom you can learn from, is invaluable. However, they should also be able to admit if they don’t know something. Candor and humility are valuable attributes. Investors should have experience that is useful, but they should also have the courage to infuse that experience with newer realities. Be careful to avoid investors that are know-it-alls or those investors that might impose their ideas of how to run the business on you. They are your advisors and mentors, not the founders or management team.

It’s Not Just About the Money
Being offered a good deal is exciting, but it’s vital to look beyond the money at who’s offering it to you. Investors are always encouraged to conduct exhaustive research on startups before investing. Why shouldn’t startups do the same research on potential investors? Do they have integrity, and what do other entrepreneurs that have taken their money say about them? Do they have the knowledge, connections and experience to help take your business to the next level?

What Do They Want in Return?
How much of a share in your company do they want? Will they want a say in how the company is run? These are crucial questions, but the most important one you need to be asking is: will you get back more than you are giving up?

You need accredited investors for your business. Visit VerifyInvestor.com to find out how to verify if investors are actually accredited investors or not.

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