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Tips on Choosing Your Investors

3 pointsby betashopabout 14 years ago

1 comment

ares2012about 14 years ago
I agree with some of the conclusions but not all of them. The following are definitely true:<p>3. Choose investors who are investing in you. 9. Get references<p>Everything else is either derived from those (points 4, 5, 6) or are just not realistic in the current world of start up investing (7, 8). Yes, it's possible an investor will make a useful introduction or two but you can more easily achieve the same end with an advisory board or personal networking.<p>While I would love to believe in "1. Choose investors you want to work with." the reality is that unless you've worked with them before you will have no idea what they are like. This is why getting references is so critical.<p>If you're going to pick an investor I recommend: 1. Talk to at least one company that investor (if a VC firm that particular partner) invested in that failed. 2. Talk to at least one company that investor invested in that succeeded. 3. Look at their portfolio and see how many companies that investor is currently involved with. A lower company/investor ratio is better. 4. Have an in depth conversation about the industry where you ask THEM questions instead of them asking you. Turn the tables and make sure you can learn from them instead of them simply learning from you.<p>Investors are investors. They spend their time investing which means that their primary value will be their money. There are exceptions to this rule but they are few and far between.
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