HomeDiscussionsVrisha Phrabhakaran's Post
How should we evaluate a potential investor?
What are the criteria start-ups should consider?
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HomeDiscussionsVrisha Phrabhakaran's Post
When approaching investors, here are some guidelines of questions and preparations when you talk to them:
When it comes to raising funds from investors, picking the right investor is crucial.
In fact, investors could totally ruin your company if chosen poorly.
Fundamentally the focus is to align your goals with theirs. If they're in for quick returns and you're building an early stage startup, that is a very bad mismatch.
Also it is crucial to understand how they can help besides just offering you money.
If they're solely giving you money, you may want to take money from those who don't expect a quick return, that gives you a longer timeline to produce results.
If you're raising money from institutional investors like VCs, that's a whole different ball-game. You need to know your numbers and can demonstrate long term potential to scale.
For me, the first thing I look for is how they treat me when I pitch to them.
If they are rude, I immediately write them off.
Investors are supposed to go into partnership with you, and the moment they act like a prick, it's not worth anyone's time.
And if they're nice, I then look to see if they would make a good partner. Things such as:
While I'm not against any investors focusing on driving returns, but they need to be very clear about what they're getting into. I don't like babysitting broke people.
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