Money, money, money — that’s the focus when entrepreneurs are raising money. Only, talk to any entrepreneur who’s raised money from multiple investors and he’ll tell you that no two investors are created equal. One area that doesn’t get the requisite level of attention is amount of investor involvement.
As with anything, the level of involvement varies dramatically. Here are a few thoughts:
- Many investors take a hands-off approach and don’t add value (the opposite of smart money)
- Some investors are very collaborative with regular phone calls and even attend weekly staff meetings to help out (reportedly, several of the most successful VCs in the world are on-site at their portfolio companies every week)
- Certain investors are more top-down and prefer to give direction at board meetings while staying out of the details and minutiae
- All investors pitch providing introductions and rolodex-related help as one of their value-adds — ask them to help before they invest and test out the value before you buy the whole thing
Investor involvement is a serious consideration and it’s best to do due diligence before taking money.
What else? What are some other thoughts on investor involvement when raising money?