The Single Most Important Factor in Choosing Investors

I was talking to Michael (not his real name), an entrepreneur who is interested in raising money. He is likable and capable, and people with money are recognizing him for it. He has recently been letting people know he is interested in expanding his business and will need to raise money. He is surprised by their reaction. They immediately volunteer to fund him.

“Forget about a prospectus and powerpoint. Let’s just discuss terms, and you’ll have the money you need to build your business,” they say.

When Money Isn’t Money

Michael is hearing this from wealth managers, friends and family, wealthy individuals, and even some of his most loyal customers. (Clearly, he has an excellent network and reputation.)

Having been down this path many times before, I was happy to help him sort through money-raising strategies. I told him what I tell everyone, “Money isn’t just money. The money comes with its owner, the people. And people come with values, expectations, and experience.”

So not all money is equal. You must be clear on who you are as the entrepreneur, where you are going, and the help you need to vet the money sources properly.

This Is Your Life Partner

When you take on money, you are taking on a long-term partner, just like you would take on a partner for an operating role like sales or product development.

The people who invest the money, especially those first investors you sell your company to, are your financial partners. This is your life partner. You must vet them.

  1. Why do they want to invest?
  2. Who are they, and what is important to them?
  3. Who else did they invest in?
  4. Do they want to be involved in strategy, operations, or introductions?
  5. What kind of return do they expect?

These are just some of the questions to ask. There are dozens of critical questions. Failure to know the answers now could be catastrophic later.

Then I asked this question, “If you had your choice of any investor in Atlanta, which one would you choose?”

His answer came quickly without a moment’s thought. “David Cummings,” he said. I was not surprised.

Why David Cummings?

“He knows how to build companies in today’s business environment using today’s tools. My other mentors and potential investors don’t have this understanding.”

I predict David Cummings will be our first billionaire in this space. He has the platform in Atlanta Tech Village along with the credibility and network. These assets put him first in line in Atlanta for quality deal flow. Getting first look at great deals is the number one requirement for success in investing. He is all over it.

We are fortunate to have David in our community. Not only for his talent, but also for his vision. He is working hard every day through his excellent daily blog and by building community at the Atlanta Tech Village. He has been fourth in the nation in 3 years.

Atlanta is on the map, in part, due to the continued efforts of David and his staff as they work toward his vision of Atlanta as a startup hub.

For privacy, certain identifying details have been changed.

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