{"id":1328,"date":"2022-07-21T07:51:45","date_gmt":"2022-07-21T12:51:45","guid":{"rendered":"https:\/\/juanjosegutierrezmayorga.com\/?p=1328"},"modified":"2022-10-30T22:34:32","modified_gmt":"2022-10-31T04:34:32","slug":"finalizing-your-investor","status":"publish","type":"post","link":"https:\/\/juanjosegutierrezmayorga.com\/en\/finalizing-your-investor\/","title":{"rendered":"Factors before finalizing your investor"},"content":{"rendered":"

Finding an<\/span> investor that believes in your passion and vision<\/b>, as well as the potential of your firm to disrupt the industry, is critical for a productive collaboration.<\/span><\/p>\n

During the early stages of a business, one of the most critical activities is fundraising. You don’t only raise cash from a private equity, venture capital, or angel investor; you marry their thinking and working culture. This connection should be a match made in heaven. Also, keep in mind that if the relocation is not done correctly, this marriage may end in divorce.<\/span><\/p>\n

Therefore, even though money is coming, entrepreneurs should <\/span>choose their investors wisely<\/b>. That is why<\/span> Lisa Juan Jos\u00e9 Guti\u00e9rrez Mayorga has prepared<\/span><\/a> some tips to wisely choose who believes in your project and prosper.<\/span><\/p>\n

Track Record with your investor<\/span><\/h2>\n

Entrepreneurs are often so happy to close a funding round that they neglect the much-recommended reverse due-diligence on the shareholders. Juan Jos\u00e9 feels reverse due-diligence is a comparable process whereby the entrepreneur seeks to validate <\/span>the track record and working style of an investor<\/b>.<\/span><\/p>\n

\u201cThis could help you notice if the potential investor<\/a> has any reputational red flags that may come back to haunt you,\u201d he added.<\/span><\/p>\n

Additionally, shareholders with a respectable reputation can facilitate more growth through industry connections and business opportunities. They can also enable future rounds of funding.<\/span><\/p>\n

Look for a Believer<\/span><\/h2>\n

Finding an investor who believes in your passion and vision<\/b> as well as startups potential to disrupt the market is crucial for a fruitful relationship.<\/span><\/p>\n

If the investment firm does not seem genuinely excited by, and appreciative of the business idea it is considered to be a red flag. Secondly, it is extremely beneficial for the investment firm to be experienced in the sector it is investing in.<\/span><\/p>\n

Their first-hand knowledge means the VC\/PE is able to add much more value to a startup\u2019s operations as well as mentor and guide them in the right direction. A shareholder should be sensitive to the nature of their role in the startup and its members. They should respect the startup’s plans for growth and allow the right person to lead the company. They have to also ensure that they intervene only when necessary.<\/span><\/p>\n

What is on the Table?<\/span><\/h2>\n

Many founders make a mistake of seeking shareholders from funds alone. What they often forget is that long after the penny is spent investors will continue to be involved in the business.<\/span><\/p>\n

Investors are able to help their investee company <\/b>in making the right market connections which add value to the business. Shareholders take an active role in companies offering wisdom,\u00a0 insights and productive thoughts. However there is a thin line that divides giving constructive advice and telling you what to do.<\/span><\/p>\n

Furthermore, entrepreneurs who wish to consider monetisation should know when and how they will be allowed to sell part of their equity so that they can get some cash rather than just an increasing value from ownership of their own shares.<\/span><\/p>\n

Future investment potential<\/span><\/h2>\n

While it may be tempting to accept the most financially appealing term-sheet, it is very important to understand <\/span>how the investor can help you for your future investment needs<\/b>. Hence, an entrepreneur needs to gauge how much a fund can directly invest in the future.\u00a0<\/span><\/p>\n