Choosing an investor is one of the most important decisions you’ll make, when setting up your business venture. They believes in you and your idea and is simultaneously capable of supporting it monetarily is a boon to any startup. These are a few points that you need to keep in mind in order to choose the right investor for your start up.
How old is your investor?
Yes age does matter. If they are old who is on the verge of retiring you will not have financial support for a long period of time. Older investors are looking for savings and profits so they will be less open to any kind of risk that you might want to take. An investor in his or her thirties to fifties is more inclined to take a higher level of investment risk and this is what you should capitalize on.
When did you investor start investing?
He is also, in some way your mentor and hence you must bank on their experience. An experienced investor will always warn you of impending financial disasters which in turn will allow you to plan ahead and mitigate the risks to avoid the same.
How much can your investor afford to lose?
They will always weigh their potential risk versus their potential reward. If your investor is a high-profile one, they will be willing to take risks and pump in more money in the event of an initial failure because it is not going to affect their standard of living. On the contrary, if he doesn’t have much to invest – they will be less likely to take risks increasing the chances of failure for your startup. With a higher affordable percentage (or reservation price), one could potentially consider more risky investments.
Does your investor have an extrovert personality?
According to experts in psychology, extroverts are more likely to take risks than introverts. Extroverts are relatively more comfortable with their surroundings which make them more open to risks. The idea of failure doesn’t scare an extrovert as much as it does an introvert.
How often does your investor regret bad choices?
This is a very personal question to ask and you probably cannot ask this question but if your investor has a big name, you can probably find news reports on how they take failures. If your investor typically regrets “bad choices” for a long time, high risk investments are not their cup of tea. At the end of the day, your choice of an investor depends on your requirement and you need to choose wisely after proper research.
Always choose an investor who is willing to invest in your idea even if there is substantial amount of risk involved. It is very important that – while sending in applications for investment choose investors based on what you need. Simply sending in your plan to all available investors is never a good idea. If you want your business to expand you need good investors.