Business

The last couple of years have been strange.  With the change in the economy, many early stage companies are looking for anybody, and I mean anybody, to invest in their capital round.  As the economy rebounds (which we are seeing in technology markets) business owners are again able to be picky when considering angel investors. 

An angel investor (or an angel investor group or private equity firm) should be more than just a liquid wallet.  He/she should be a strategic member of your team.  They should be useful, ethical and valuable.  For the next few years these folks will be in your life – so make sure you want them there!

Here are ten questions to ask when considering an angel investor:

1.    Does the investor offer cash without ridiculous conditions?
2.    Is the investor interested in future rounds?
3.    Does the investor understand your market?
4.    Can the investor assist in developing customers or networks within your market?
5.    Does the investor bring a necessary skill set to the company?
6.    Is the investor honest?
7.    Is the investor respectful?
8.    Does the investor have a good reputation in the community?
9.    Will the investor be a time suck on you and/or key employees?
10.   Is the investor an a#*hole?


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See Also:

Funding Innovation in Indiana
Funding Law - Investor Impatience
Random Thoughts on Private Equity
Funding Law - Know Your Numbers
Entrepreneurial Law - Developing a Good Business Model
Culture of Private Equity
A World of Private Equity
Rules of Funding
Entrepreneurial Law - Proof of Concept & Proof of Scale
Fatal Flaws in Leadership
Funding Law - Presentations to Investors