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Potential business investors ?

How do I know what type of person is a good investor for my business ? #business

Thank you comment icon Awesome question. What I enjoy about this is that you're evaluating your investors as people, not just as sources of financing. Too many entrepreneurs make the mistake of assuming that all investors are equal. Jared Chung, Admin

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Ace’s Answer

This is a loaded question, but I will do my best to answer given the limited information you provided. Some things I'd like for you to think about are:




  1. What is your Business?
    a.) Within what industry?
    b.) What is your product or service?
    c.) Who do you view as your potential customer?
    d.) Who do you view as potential competitors?
    e.) What is your core strategy? How will you compete, how will you win, how will you position yourself in the market?




  2. What are your core competencies? What are not your core competencies?
    Are you good at web, programming, business models, financials, social media, community building, engineering, product development, and so forth...




  3. What is the current size of your business now and what will the size of your company be when you require funding?
    Is your company a one man shop? How much revenues does it bring in per year per quarter? What is the valuation you hold on your company? How much do you think the company can or will scale?




This is a short list of questions every business owner has to ask and answer before receiving funding from any serious investor. The answer to these questions will allow "YOU" to decide which type of investor may work best given your situation. For example, if you are a company just starting out and you require seed funding, then you would most likely look to family members and friends, possibly angel investors to help you. Remember, it is always important to find the proper fit. Meaning that money is not the only thing you should consider. For example, when you are able to answer what your core competencies are and are not, you should look for investors that can complement and fill the gaps on things you need to work on. Additionally, you want to find investors that have experience in your domain. Ex-entrepreneurs who have an understanding of your industry and business are the best investor partners to have.


Again, look for compliments between your business and your prospective investors. Answer the questions above and seek out the best person to invest in your company given your situation. If your company brings in revenues of over 1 million dollars per year and is ready to scale massively, then look to VC's to fill the gap if you want to grow quickly. If not, grow organically and keep more ownership of your company in the future. There are many factors involved in finding the right investor for your business, but hopefully this can kick you off in the right direction.


Good Luck!

Thank you comment icon +1 for this comment. As an entrepreneur, I couldn't have said it better myself. This is consistent with my experiences. Jared Chung, Admin
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Jeanne’s Answer

Trust is a very important aspect of finding the right investor.


Investors provide you with something you need, usually money, advice/mentorship, or introductions to others who you need to grow your business. An investor may have a lot of money, provide advice, and have a great network, but not be a good investor for you, if you don't fully trust him or her. For example, an investor who just wants a quick return (repayment of the amount he or she invested plus profit from the investment) will provide guidance or negotiate terms for short term benefits. You as the entrepreneur though may have longer term sights in mind, and want to make decisions for the long term. Thus, there is a conflict of interest, which can make the relationship difficult.


Entrepreneurs face many obstacles, so need an investor who you can trust to have your business' best interest in mind at all times.

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Engineer87’s Answer

I've been an entrepreneur multiple times over, and I also invest in businesses on a regular basis.


You would want to find someone with not just money, but also the skills and experience to help you grow your company. Someone with money is like someone who writes you a check, and then expects you to do all the work. The best investor is someone who will give you money, and then also care about your business enough to help you grow the company. They might even help you get your first customers! There are so many different skills an investor can bring to help you besides money.

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