I am interested in seeing what experiences entrepreneurs have with their investors. To what extent does the investor control or influence hiring decisions, product direction, business strategy, partnerships, technical direction, or other aspects? Obviously their support is necessary, but I am curious how much investors vary in their approach.
Loosing focus is the worst thing that can happen to a founder. You and the leadership team need to push towards your mission and vision with board alignment and anything else outside of that is noise and a distraction.
Some investors add a tremendous amount of value and understand the challenges that an early stage venture faces over the course of time. Unfortunately other investors lack the knowledge and this type of folks are the ones that can end up pushing you in the wrong path with new ideas that they wake up with. Having the latter as board members can obviously be very dangerous as they have voice and vote on company direction. Stay way from putting the wrong people on the wrong seats.
Ultimately remember that investors invested in you. That means that you are in the end accountable for leading the way forward. However, you need to be able to listen and also be coachable so that you can reduce the steep learning curve that you have ahead with building and scaling your business.
A lot. Keep in mind you are buying the investor's money using equity. So do your own due diligence on investors. You should check their references and talk with other entrepreneurs who have worked with them. Pay at least as much attention to buying money as you do when you buy a car.
I have seen everything from "clueless" to "Machiavellian" and everything in between.
You have to appreciate that investors are investors for one major reason, profit.
So, I can imagine that they'd do anything to guarantee the success of maximising their profit, and in turn this is what you too want.
Sure, there is a 'my baby' scenario and a SnapChat, we have a vision that is more hip, cool and focus' on the target market that those damn old boy corporate executives that they may persuade you to hire.
If you can logically and strategically argue that your business decisions are better than theirs then do so; one part of the job of a CEO is to know how to 'win friends and influence people' and should therefore be able to reasonably argue their chess like decision making process.
They may look to try to monetise early (for example intrusive advertising on a website), and this may drive your target market away. Therefore, set a date 6 months or a year in future, therefore your negotiating and it's a win win.
Appreciate that there should always, at least feel, like a win win in a negotiation, and try not to let them think or feel like investing in you will or is a long drawn out process to a small profit, let them see a future and a vision to a big pay out of success.
You gotta also appreciate, that most people don't 'beat' themselves up enough. An entrepreneur job is not a relaxed, 9 to 5, it's a race, a serious race. Too many entrepreneurs think that getting funding is a time to rest or relax, you've got money and the drive is slowing down. You should always be sweating!! always!
Imagine that being an entrepreneur is like body building, you think that success is indicated by the fact that you're going to the gym. It is not. Is success the fact that you're gaining muscle weight 10kg over a year? no! I can do that in 3 months. You're trying to be Arnold Schwarzenegger, you gotta get your technique perfect, you gotta work super super hard, be very organised, superior levels of dedication and very very competitive to be a Mr Universe Champion. Because what is the point of coming in second??
You're a programmer, program better, or like me, program a program that programs your programs. Fight because the world is competitive, and because it's fun and you can.
I have run companies with investors who contribute as necessary and requested and those where they meddle in the operations. Pick investors carefully. Over-involved investors will make your life difficult and your success diminished, if not failed. You need to understand them before you take their money.
The answer is not a static one for any given company - it depends on how things are going. In my experience, once you've gained their confidence to get funded, then so long as you execute to plan, they will provide exactly what you agreed should be available in terms of involvement - they're all different and you try to pick what you need.
If your plan starts becoming unsuccessful, then they will use whatever means are available to get information and understand why things are not working out. If you find yourself needing more money and performance is below target, then I would expect them to negotiate i) better upside for them to help out to reflect new risk, ii) more involvement, and iii) potentially inserting people into your company at your cost to ensure execution improves. Unprincipled investors will also look to to kick you out and take you over, which is why you need careful scrutiny and understanding of your investor's history and your funding terms. More than one unfortunate entrepreneur has lost everything when an aggressive investor suddenly pulls a funding loan and picks up the pieces out of receivership.
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