The business idea has been sketched and the kinks worked out. Now what? Initially, the company may be funded by its founders, but what happens when expansion is needed? Choosing a capital source is critical in the early stages of a project and entrepreneurs must research available options and consider the best solution for their business.
If you are thinking about investors, large dollar signs tend to become the top priority when offers are made. Just as you’d ask good questions of an asset-based lending or factoring company, here are a few questions to keep in mind when choosing a venture capital investor:
- Do the investors want me to change anything about my company?
- What’s the catch?
- Read the fine print
- Who are your investors? (Research them, including their digital fingerprints/social media presence.)
- Do their references clear?
- How will the investor’s name affect my idea in the long run?
Often times, a new business will focus on the $10,000 investment instead of the fine print, such as: “this offer is only valid if the party being sponsored agrees to find a new co-founder.” Introduction of a distractor is not uncommon and will steer the path of the company away from its original intent. Stand by the mission of your company and why it is relevant.
Remember, not all investors have positive intentions, but not all investors have negative ones either. There are investors who are genuinely interested in your project and see its potential; it’s just a matter of finding the right and mutually beneficial relationship.
If you have any questions about investing, factoring or asset-based lending, give us a call!