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> a non participating investor owning 25% of the business That is absolutely a red flag. If someone owns 25% of the business, they better be working to grow, i
by caseysoftware 9y ago
> a non participating investor owning 25% of the business
That is absolutely a red flag. If someone owns 25% of the business, they better be working to grow, improve, or otherwise assist the business on a daily basis. If nothing else, out of self-preservation to protect and grow their investment.
If they're a 1% investor, that's a different story.
- TuringNYC 9y agoCurious how you'd evaluate a 25% (or even 10%) owner who is an Angel investor. They provided capital, perhaps some contacts, but is not actively engaged in growing the business?
- greglindahl 9y agoAre they disaffected? Do they understand the usual trajectory and terms for Silicon Valley-style startups? If it's 25% and the angel doesn't appear to have angel experience, you can bet that future investors are going to want to interview the angel!
- caseysoftware 9y agoI expect investors to fit in at least one of three buckets: - understand the industry; - understand the go to market/sales approach; or - understand the current stage of the company and what it takes to move to the next. And within each of those, they should have relationships, information, and strategies that accelerate the company in some way. It's not just a "look at my linked in and tell me who you'd like to meet" but a focused "I know A, B, and C who beat the problems that you're dealing with. let me get them right now and see if they can offer advice" and then a while later "Oh, you need X. I know a guy who does that. I'll get back to you."
- derefr 9y agoWhat about (very wealthy) friends-and-family round investors, who understand the people involved but nothing else?
- caseysoftware 9y agoThen they shouldn't be anywhere near 25%.