I’ve had startup founders tell me that it’s only about the color of the money, but I disagree. Particularly if you are desperate, keep in mind the person who finds a good-looking partner to take home from the bar at closing time, but then wakes up in the morning wondering “What did I just do?” Taking on an investor is like getting married – the relationship has to work at all levels.
Due diligence on an investor is where you validate the track record, operating style, and motivation of your new potential partner. Maybe more importantly, you need to confirm that the investor “chemistry” matches yours. Here are some techniques for making the assessment:
- Talk to other investors. The investment community in any geographic area is not that large, and most investors have relationships or knowledge of most of the others. Of course, you need to listen for biases, but local angel group leaders can quickly tell you who the bad angels and good angels are, and what kind of terms they typically demand.
- Network with other entrepreneurs. Contact peers you have met through networking, both ones who have used this investor, and ones who haven’t. Ask the investor for “references,” meaning contacts at companies where previous investments were made. Don’t just call, but personally visit these contacts.
- Check track record on the Internet and social network. Do a simple Google search like you would on any company or individual before signing a contract. Look for positive or negative news articles, any controversial relationships, and involvement in community organizations. Check the profile of principals on LinkedIn and Facebook.
- Spend time with investors in a non-work environment. As with any relationship, don’t just close the deal in a heated rush. Invite the investment principal to a sports event, or join them in helping at a non-profit cause. Here is where you will really learn if there is a chemistry match that will likely lead to a good mentoring and business relationship.
- Validate business and financial status. Visit the firm’s website and read it carefully. Look for a background and experience in your industry, as well as quality and style. Conduct a routine credit and criminal check, using commercial services like HireRight. Be wary of individuals or funds sourced from offshore.
If you think all this sounds a bit sinister and unnecessary, go back and read again some of the articles about Bernie Madoff and recent investment scams. Remember, if it sounds too good to be true, it probably isn’t true. Entrepreneurs are optimists by nature, so I definitely recommend the involvement of your favorite attorney (usually the pessimist).
I recognize that it has been tough to raise capital these last couple of years, but don’t be tempted to take money from any source. This can be a big mistake, with common complaints running the gamut from unreasonable terms, constant pressure, to company takeovers. Be vigilant and ask questions.
A successful entrepreneur-investor agreement better be the beginning of a long-term relationship. If you don’t feel excited and energized by your first discussions with an investor, give it some time and do your homework. If the feeling doesn’t grow, it may be time to move on. It’s better to be alone than to wish you were alone.
Martin Zwilling is CEO & Founder of Startup Professionals, Inc.; he also serves as Board Member and Executive in Residence at Callaman Ventures and is an advisory board member for multiple startups.This post was originally published on his blog, and it is republished here with permission.
Even as India basks in the respect showered on it as a player on the global stage by President Barack Obama, a wave of despondency is rising among almost all sections of the people at the rampant corruption corroding its politicians, bureaucrats and media.
Recent revelations indicate misappropriation of nearly $900 million in various scams orchestrated by senior politicians, ministers and top officials. The latest episode was the disappearance of some $200 million in the run up to the 2010 Commonwealth Games in October and new information about a $400 million misappropriation some years ago during allocation of cellular telephone licenses. A particularly painful recent revelation was the allocation of heavily subsidized apartments in a prime area of Mumbai to senior military figures, bureaucrats and politicians instead of the war widows and war wounded for whom they were meant as a grateful nation’s thanks.
A crucial leadership meeting today of India’s venerable Congress Party, which heads the current national coalition government, failed to make corruption a main driver of its political agenda. Congress leaders blamed high level figures in the opposition parties for some of the corruption cases highlighted by the media, thus making corruption a political issue instead of a national scandal cutting across Party lines.
Prime Minister Manmohan Singh, who is widely admired for his personal incorruptibility, and Congress President Sonia Gandhi fueled a sense of helplessness at the impunity of the corrupt when they denounced this malevolence but remained silent about allegations against top Congress politicians and leaders of coalition allies.
Corruption is thought to be embedded deeply at every level, high or low, of every institution of national democracy, including the judiciary, police, tax administration, top administrative officials and politicians. Indian laws disallow investigation or prosecution of politicians without parliament’s permission and of middle and senior bureaucrats without permission from the cabinet of ministers.
There is no institution beyond the control of government or bureaucracy with independent investigative powers and the authority to prosecute politicians or officials. Although draconian laws exist to prevent and punish the corrupt, they are rarely applied and have failed as deterrents.
Obama’s visit and thoughtful words seem to have opened Indian minds to the extraordinary potential of their country. For the first time the leader of the Western world is offering India a seat at the top economic and security tables as a partner. China sits at the top tables because it is feared and its intentions are suspect. India is being asked as a friend.
Suddenly, previous US rhetoric about India’s valued role in world affairs has changed into genuine belief in her ability to help create a more equitable, secure and people-friendly world order. This has jolted Indians out of resignation to being exploited by institutionalized corruption in all corridors of power.
In general, India is dynamic, creative and youthful compared to Western nations, China and Japan. There is energy and excitement about economic growth and making money. But Obama’s visit heightened realization that corruption is a greater enemy of better lives for Indians than poverty and other material shortages.
Disappointment is growing because of recognition that the people cannot trust any institution to impartially uncover and punish the corrupt. The discovery that some senior army generals were involved in Mumbai’s real estate scandal has caused consternation because the army was widely admired for being incorruptible.
A feeling of helplessness is rising because there seem to be no workable solutions, although politicians rail against corruption across Party lines. It turns out that everybody is naked because Sonia Gandhi and Manmohan Singh, both known for their probity, are reluctant to aggressively implement anti-corruption drives within their own Party while making shrill accusations against opposition figures. They fear to open a Pandora’s Box capable of bringing down the government by causing severe losses for the Congress and its allies in elections at the State and local levels.
Even the media is no longer trusted as an honest filter between the powerful and the people. This is mainly because major newspapers and TV channels do not clearly differentiate sponsored news and analysis from genuine reporting.
Transparency international ranks India at 87th place in its index of corrupt countries. There is little hope that things will change dramatically for the better soon.
bench craft company reviews
Can Mobile Phones Think?: Tech <b>News</b> «
Nokia's Beta Labs today released a new experimental application called Situations, and it portends a future where context awareness drives the mobile experience, and points to a time when our handsets will do the thinking on our behalf, ...
Sun TV <b>News</b> application approved - Need to know - Macleans.ca
Sun TV News has been green-lit by the CRTC after a long war with the regulator and critics who are opposed to the 24-7 news-and-opinion channel nicknamed “Fox News North.” The CRTC had previously refused to grant the Quebecor property a ...
<b>News</b> and Notes - Brazil
News and Notes. November 27th, 2010 | by: Duvel | Comments (0). Ganso Return Julio Cesar appears to be out until January with a torn thigh muscle. The Inter Milan keeper has not played for his club since an October 29th start against ...
bench craft company reviews
Can Mobile Phones Think?: Tech <b>News</b> «
Nokia's Beta Labs today released a new experimental application called Situations, and it portends a future where context awareness drives the mobile experience, and points to a time when our handsets will do the thinking on our behalf, ...
Sun TV <b>News</b> application approved - Need to know - Macleans.ca
Sun TV News has been green-lit by the CRTC after a long war with the regulator and critics who are opposed to the 24-7 news-and-opinion channel nicknamed “Fox News North.” The CRTC had previously refused to grant the Quebecor property a ...
<b>News</b> and Notes - Brazil
News and Notes. November 27th, 2010 | by: Duvel | Comments (0). Ganso Return Julio Cesar appears to be out until January with a torn thigh muscle. The Inter Milan keeper has not played for his club since an October 29th start against ...
bench craft company reviews
Due diligence should always be a two-way street. A while back, I published an article on “Understanding the Dreaded Investor Due Diligence,” describing what investors do to validate your startup before they invest. Here is the inverse, sometimes called reverse due diligence, describing what you should do to validate your investor before signing up for an equity partnership.
I’ve had startup founders tell me that it’s only about the color of the money, but I disagree. Particularly if you are desperate, keep in mind the person who finds a good-looking partner to take home from the bar at closing time, but then wakes up in the morning wondering “What did I just do?” Taking on an investor is like getting married – the relationship has to work at all levels.
Due diligence on an investor is where you validate the track record, operating style, and motivation of your new potential partner. Maybe more importantly, you need to confirm that the investor “chemistry” matches yours. Here are some techniques for making the assessment:
- Talk to other investors. The investment community in any geographic area is not that large, and most investors have relationships or knowledge of most of the others. Of course, you need to listen for biases, but local angel group leaders can quickly tell you who the bad angels and good angels are, and what kind of terms they typically demand.
- Network with other entrepreneurs. Contact peers you have met through networking, both ones who have used this investor, and ones who haven’t. Ask the investor for “references,” meaning contacts at companies where previous investments were made. Don’t just call, but personally visit these contacts.
- Check track record on the Internet and social network. Do a simple Google search like you would on any company or individual before signing a contract. Look for positive or negative news articles, any controversial relationships, and involvement in community organizations. Check the profile of principals on LinkedIn and Facebook.
- Spend time with investors in a non-work environment. As with any relationship, don’t just close the deal in a heated rush. Invite the investment principal to a sports event, or join them in helping at a non-profit cause. Here is where you will really learn if there is a chemistry match that will likely lead to a good mentoring and business relationship.
- Validate business and financial status. Visit the firm’s website and read it carefully. Look for a background and experience in your industry, as well as quality and style. Conduct a routine credit and criminal check, using commercial services like HireRight. Be wary of individuals or funds sourced from offshore.
If you think all this sounds a bit sinister and unnecessary, go back and read again some of the articles about Bernie Madoff and recent investment scams. Remember, if it sounds too good to be true, it probably isn’t true. Entrepreneurs are optimists by nature, so I definitely recommend the involvement of your favorite attorney (usually the pessimist).
I recognize that it has been tough to raise capital these last couple of years, but don’t be tempted to take money from any source. This can be a big mistake, with common complaints running the gamut from unreasonable terms, constant pressure, to company takeovers. Be vigilant and ask questions.
A successful entrepreneur-investor agreement better be the beginning of a long-term relationship. If you don’t feel excited and energized by your first discussions with an investor, give it some time and do your homework. If the feeling doesn’t grow, it may be time to move on. It’s better to be alone than to wish you were alone.
Martin Zwilling is CEO & Founder of Startup Professionals, Inc.; he also serves as Board Member and Executive in Residence at Callaman Ventures and is an advisory board member for multiple startups.This post was originally published on his blog, and it is republished here with permission.
Even as India basks in the respect showered on it as a player on the global stage by President Barack Obama, a wave of despondency is rising among almost all sections of the people at the rampant corruption corroding its politicians, bureaucrats and media.
Recent revelations indicate misappropriation of nearly $900 million in various scams orchestrated by senior politicians, ministers and top officials. The latest episode was the disappearance of some $200 million in the run up to the 2010 Commonwealth Games in October and new information about a $400 million misappropriation some years ago during allocation of cellular telephone licenses. A particularly painful recent revelation was the allocation of heavily subsidized apartments in a prime area of Mumbai to senior military figures, bureaucrats and politicians instead of the war widows and war wounded for whom they were meant as a grateful nation’s thanks.
A crucial leadership meeting today of India’s venerable Congress Party, which heads the current national coalition government, failed to make corruption a main driver of its political agenda. Congress leaders blamed high level figures in the opposition parties for some of the corruption cases highlighted by the media, thus making corruption a political issue instead of a national scandal cutting across Party lines.
Prime Minister Manmohan Singh, who is widely admired for his personal incorruptibility, and Congress President Sonia Gandhi fueled a sense of helplessness at the impunity of the corrupt when they denounced this malevolence but remained silent about allegations against top Congress politicians and leaders of coalition allies.
Corruption is thought to be embedded deeply at every level, high or low, of every institution of national democracy, including the judiciary, police, tax administration, top administrative officials and politicians. Indian laws disallow investigation or prosecution of politicians without parliament’s permission and of middle and senior bureaucrats without permission from the cabinet of ministers.
There is no institution beyond the control of government or bureaucracy with independent investigative powers and the authority to prosecute politicians or officials. Although draconian laws exist to prevent and punish the corrupt, they are rarely applied and have failed as deterrents.
Obama’s visit and thoughtful words seem to have opened Indian minds to the extraordinary potential of their country. For the first time the leader of the Western world is offering India a seat at the top economic and security tables as a partner. China sits at the top tables because it is feared and its intentions are suspect. India is being asked as a friend.
Suddenly, previous US rhetoric about India’s valued role in world affairs has changed into genuine belief in her ability to help create a more equitable, secure and people-friendly world order. This has jolted Indians out of resignation to being exploited by institutionalized corruption in all corridors of power.
In general, India is dynamic, creative and youthful compared to Western nations, China and Japan. There is energy and excitement about economic growth and making money. But Obama’s visit heightened realization that corruption is a greater enemy of better lives for Indians than poverty and other material shortages.
Disappointment is growing because of recognition that the people cannot trust any institution to impartially uncover and punish the corrupt. The discovery that some senior army generals were involved in Mumbai’s real estate scandal has caused consternation because the army was widely admired for being incorruptible.
A feeling of helplessness is rising because there seem to be no workable solutions, although politicians rail against corruption across Party lines. It turns out that everybody is naked because Sonia Gandhi and Manmohan Singh, both known for their probity, are reluctant to aggressively implement anti-corruption drives within their own Party while making shrill accusations against opposition figures. They fear to open a Pandora’s Box capable of bringing down the government by causing severe losses for the Congress and its allies in elections at the State and local levels.
Even the media is no longer trusted as an honest filter between the powerful and the people. This is mainly because major newspapers and TV channels do not clearly differentiate sponsored news and analysis from genuine reporting.
Transparency international ranks India at 87th place in its index of corrupt countries. There is little hope that things will change dramatically for the better soon.
bench craft company reviews
Can Mobile Phones Think?: Tech <b>News</b> «
Nokia's Beta Labs today released a new experimental application called Situations, and it portends a future where context awareness drives the mobile experience, and points to a time when our handsets will do the thinking on our behalf, ...
Sun TV <b>News</b> application approved - Need to know - Macleans.ca
Sun TV News has been green-lit by the CRTC after a long war with the regulator and critics who are opposed to the 24-7 news-and-opinion channel nicknamed “Fox News North.” The CRTC had previously refused to grant the Quebecor property a ...
<b>News</b> and Notes - Brazil
News and Notes. November 27th, 2010 | by: Duvel | Comments (0). Ganso Return Julio Cesar appears to be out until January with a torn thigh muscle. The Inter Milan keeper has not played for his club since an October 29th start against ...
bench craft company reviews
Can Mobile Phones Think?: Tech <b>News</b> «
Nokia's Beta Labs today released a new experimental application called Situations, and it portends a future where context awareness drives the mobile experience, and points to a time when our handsets will do the thinking on our behalf, ...
Sun TV <b>News</b> application approved - Need to know - Macleans.ca
Sun TV News has been green-lit by the CRTC after a long war with the regulator and critics who are opposed to the 24-7 news-and-opinion channel nicknamed “Fox News North.” The CRTC had previously refused to grant the Quebecor property a ...
<b>News</b> and Notes - Brazil
News and Notes. November 27th, 2010 | by: Duvel | Comments (0). Ganso Return Julio Cesar appears to be out until January with a torn thigh muscle. The Inter Milan keeper has not played for his club since an October 29th start against ...
bench craft company reviews
No comments:
Post a Comment