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By PASCAL FINETTE

The Heretic is a free dispatch delivering insights into what it takes to lead into & in the unknown. For entrepreneurs, corporate irritants and change makers. Raw, unfiltered and opinionated.

be radical.

Mar 16th, 2013 Share: Share on Twitter Share on Facebook Share on LinkedIn

Ask The Heretic — Investor Relations

In a response to yesterday’s post “The Funding Oxymoron” one of our fellow heretics asked me about the delicate nature of investor relations. Specifically the question was “[…] please write more on what an effective and healthy relationship between startup teams and investors looks like. Where do intentions between the different stakeholders begin to diverge, and what are the different outcomes?”

Excellent question. And if you have followed my ramblings for a while you will have realized that I am in two minds about this. On one hand you might need investment (and thus investors) to do what you want to do. A good investor will help guide you through the process of building and growing your startup. A great one will become indispensable. And yet — there are plenty of examples of investor/startup relationships gone south (including the tale of my very own first startup).

More than anything I encourage you to view your relationship with an investor as a long-term partnership build on mutual trust and respect. Start out with the understanding that your investor has a job: His job is to make money on the investment. This is and must be his number one priority. You have to respect this.

Having said that a good investor wants to see you succeed. The best investors have been in your shoes before — starting and running their own companies. They understand the sometimes intricate balancing act you, as an entrepreneur, have to do.

Spend time looking for the right partner. Just as in dating you want to dig around a bit, want to understand what his personality is. Talk to the founders of other companies he has invested in, understand his background (Was he an entrepreneur himself? How did that go for him? Or does he come from a finance background?).

Trust me — not all money is equal. A good investor can make the world of a difference to you. And a bad one can become your biggest nightmare.


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