Everybody has startup advice. Should you be listening to ours?
Due Diligence (DD) is a two way street.
Entrepreneurs should be looking for “smart money.”
Your best interest is best served with investors who have sufficient skills, experiential knowledge, & networks to provide more than just money to portfolio companies after investment.
Do not make the error of underestimating the value of the skilled investor.
Imagine you have the opportunity to receive an investment from one of three firms.
Which would you choose?
If one firm offered incredible value compared to the others might you consider accepting a slightly lower valuation?
Ask yourself.
Do you like the investors?
Could you imagine working with them over several years?
Do they bring real value to your company?
Do they provide post investment support?
Mentoring, introductions to customers, potential partners, help in raising additional capital, education in preparing the company for exit, and so on.
Be nice, and respectful (you are asking them money, right?).
Go ahead and ask for a list of entrepreneurs they have funded, why not?
If they are resistant they should have a very, very good reason. And there are some good reasons.
Remain skeptical.
Due diligence is a two-way street.
Due your Own diligence on your potential investors while they are validating you.
Raising money takes time – more time than either entrepreneurs or investors desire or anticipate.
So it goes . ..
Dresden Capital 