Not all investors are good investors

Over the years, I have heard many horror stories from business owners who selected the wrong investor and have regretted their choice and decision for many years. However, It’s clearly not all bad news, many successful businesses will put all or part of their success down to finding the right partner. Finding the right investor can be highly rewarding for all parties, often acting as the catalyst to propel your business forward. But this is never guaranteed, you really cannot afford to get this one wrong.

The right business investor can provide many benefits, including:

• Financial support: A compatible investor can provide the necessary capital to grow and scale your business.
• Expertise and network: Investors often bring a wealth of experience and connections that can help your business succeed.
• Strategic guidance: A compatible investor can provide valuable insights and advice to help you make strategic decisions for your business.
• Aligned values and goals: When an investor shares your values and goals, you can work together to build a successful and sustainable business.
• Increased credibility: Having a reputable and experienced investor on board can increase the credibility of your business, making it easier to secure additional funding and partnerships.
• Access to new markets and resources: An investor with a strong network and presence in a particular industry or market can help you access new opportunities and resources.

Having the right business investor can prove to be a significant advantage, providing not only financial support but also valuable expertise, strategic guidance, and increased credibility to help your business succeed.

Select the wrong investor and you can “open a large can of worms”. Typical disadvantages and problems can include:

• Conflicts and misalignment: When an investor's values, goals, or expectations are misaligned with your own, it can lead to conflicts and negatively impact the decision-making process for your business.
• Loss of control: An investor who demands excessive control or influence over your business can negatively impact your ability to make decisions and achieve your goals.
• Poor support and guidance: An investor who does not provide the level of support and guidance your business needs can hinder its growth and success.
• Damage to reputation and brand: An investor with a history of unethical or sharp practices can damage your business's reputation and brand.
• Strain on relationships: An investor who is difficult to work with or has a history of mistreating stakeholders can strain your relationships with employees, partners, and customers.

Selecting the wrong investor can have serious consequences for your business. It's important to thoroughly research and vet potential investors to make sure they are a good fit and will provide the support and guidance your business needs to succeed.

Caution - never rush or be pushed into a decision with an investor.

The power of choice is an important factor when making a significant business decision. Don’t engage with just one investor, you need multiple options on the table to be able to make the best decision. Having choices and options increases your chances of finding the right investor and more importantly avoiding the wrong ones. It will also give you greater bargaining power, if you negotiate with a single investor, you have little negotiation leverage and will never know if a better option was available elsewhere.

In conclusion, not all investors are good or can be trusted. Your success when seeking the right investor will hinge not only on your business, the growth plan, or track record, but also how you find and qualify any potential investors. In most cases it’s better to have no investor than the wrong one.

If you are looking for an equity investor, full or partial sale, start early and make time and patience your advantage. Remember there are no reliable short cuts or quick fixes.