Picking the right investor
To cater to the demand of rising entrepreneurs, there are various types of investors who have come up including angel investors and venture capitalists, in addition to the traditional sources like banks and lenders. But be careful in choosing the right investor for your venture instead of attracting vultures! Here are a few questions to ask your potential investor:
1. Do you have the money to invest? There are enough frauds in the market who claim they are investors without having any money to invest. So just do your due diligence before sharing your ideas with them. If someone claims they have crores, ask them for Rs 1-2 lakh and see their response! Also, do not go for those who invest more or less money than you actually need.
2. Do you have the desire to invest? There is a category of rich people with money but have no clue about investing in others’ businesses. So before meeting rich people, check their investment quotient.
3. Check the legality of funds: Most venture capital funds in India are SEBI registered and listed on the public website. You can do your own check for the legality of fund from the SEBI sources. However, there is no such registration available for individual investors. You can ask the investor to share his previous history of investments and meet people who have been funded by him/her in the past to verify.
4. Personal involvement in company affairs: There are various investors who involve themselves in the company affairs. Also, with investments, you lose a degree of control of your company. Depending on your preference as a business owner and need of business, this nature of an investor is crucial. Take time to understand the non-financial aspects of investments.
5. Value-addition beyond the money: An angel investor, network or venture capitalist should come with value addition beyond the money itself. They could help your business in customer acquisitions and hiring teams. It is important for you to understand if the investor is bringing something extra to the table beyond the money itself.
Article Link: http://expressbuzz.com/education/picking-the-right-investor/344053.html