Choosing the right investor can be critical to driving your business forward, and the process should not be taken lightly. There are so many factors to consider, but some are far more critical than others. Let’s explore four key considerations before making the big decision.
1. The Value-add Choice
From the outset, look for investors whose advice you can trust, who believe in you and who can provide practical solutions and strategies at each of your various business touchpoints. A good investor will have a solid understanding of your market segment and have the passion and drive to truly add value to your strategy moving forward.
The right investor should have the adequate funds to help your business from the start, and they should also support your growth and help you scale. On top of this, a value-add investor should bring with them a wealth of insights and business networks to truly take your company to the next level and gain real competitive advantage.
2. Aligned Goals and Interests
One of the most critical factors when considering the right investor is to find out whether their interests are appropriately aligned with yours. Identify investors who are familiar with your business model, customer base and digital platforms, as well as your competitors within the market. The more your investor’s goals are aligned with yours, the more open they will be to actively listen and offer strategic and customised direction.
3. Research, Screen and Specify
Investors will no doubt ask a lot of questions about your company, business plan, team dynamic and growth strategy, but conducting adequate research on potential investors is just as important. Screening your investors requires significant time, resources and the ability to ask probing questions.
Be clear about what you need, what you expect and the extent to which you require their involvement. Investors can’t always be there for companies that are downright failing, but you should choose an investor who has the reputation and competence for providing the right support and direction – even when things get tough.
4. Dollars and Sense
While large-scale monetary investors may seem appealing, don’t jump in too soon. Anybody can give you money, but only a precious few can offer the strategic advice your business needs to move to the next level. You may also find that different types of investors will be relevant to your business needs at different stages of your company’s life cycle, from startup to scaled growth.
Take some time to do a composite of exactly what the right investor looks like for your business – the one that really fits your entrepreneurial vision. Don’t simply jump at the investor with the biggest bundle of cash. Find someone who truly believes in your overall vision, understands your market segment and challenges, and has the right business acumen to help your company grow and succeed.
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.