editor’s note: the author of this paper is Chris Myers, the founder and CEO of financial management solutions provider BodeTree.
financing is the most difficult part of entrepreneurship., both for investors, or founder, they must consider clearly become the most intimate partner development is in a company.
although investors and entrepreneurs have pressure, but entrepreneurs tend to be more nervous. The relationship between creative enterprises and investors rarely symmetrical, investors holding the record prices and decide capital, young companies must play their own potential, which makes most entrepreneurs feel no bargaining chips.
but the positive side is that most investors are in the value creation industry, once they are entrepreneurs, understand the sour, sweet, bitter, hot.
"no harm" principle
Of course we can not say
investors decide not to ask some words do, after all they are using their own money to bet. However, any professional investors will abide by a principle that is "no harm" principle.
however, the reality is always so bad with the ideal point, there are always not professional, inexperienced, incompetent investors to bring their future investment objects into tons of tons of damage.
I have a deep understanding of this point. Not so long ago, I was almost a venture fund "missile" shot (here I do not mention the name). The fund was originally promised to invest in my company, but at the last minute rush to withdraw.
actually invested in the red light has long been lit, I unilaterally ignore them. I wanted to finish this round of financing, blind behavior of investors.
fortunately, rather than investors after regret, my situation is not sad. However, this experience is still painful, I also summed up some experience. The following is I think in every entrepreneur to communicate with potential investors, should avoid several minefields.
due diligence due diligence
venture capital industry people know that due diligence is a difficult, painful, in the final analysis is very simple work. Professional investors will give you a false impression, it seems that the investment from beginning to end is a matter of science, but in fact, there are only 4 important factors:
1. Does this product or service address a significant demand problem in a completely different or valuable way?
2. This business model is reasonable?
3. Do you trust and respect this management team?
4. This investment is in line with their investment orientation?
of course, in the real investment before is do some due diligence without rebuke. Jargon goes, "trust to check", the only way.