Choosing the best investor for you
While we like to think we’re brilliant angel investors, we know we’re not right for every Founder.
Ignoring the tales of devious investors who lead young businesses astray, there are many examples of well intentioned investors and brilliant founders, who simply are unable to work together. A shared vision, ethos, and interests are critical to ensure you get the most, and feel the most empowered, from your angel investor.
Here at Freston, we believe the due diligence process works both ways. While we’re assessing whether to invest in a Founder, we fully expect the Founder to assess us as partners. Our tips for Founders are:
Sector expertise and experience
Look into what areas of expertise your angel has. Think about what your business will need in the next couple of years and how your angel’s knowledge and skills fit with these goals. Some of the most impressive Founders we’ve met are the ones who have plotted out their needs in 2 years, and strategically chased angel investors with relevant capabilities.
Success of previous investments
Find out what types of investments they have been involved in and how successful they were. For example, have their businesses gone on to a successful ‘exit’ (public listings or an M&A sale) or raised further funding at higher valuations?
Consider feedback from other businesses your investor has funded. Their reputation among these businesses will tell you a lot about how they work and how effective your partnership could be.
Amount of non-financial support
Make sure you know what support you will be receiving from your investor. Someone that will give you access to expertise, network and equipment as well as money will be a more helpful partner.
Transparency during due diligence
It’s important that you maintain honesty with your investors, so transparency is key from both parties. If you feel like you can’t trust them, this may be an issue further down the line.
At Freston, we work very closely over many years with our Founders. So the relationship is vitally important. Founders should definitely do their due diligence!
To find out more about choosing the right investor, check out our other Freston Ventures articles: