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Nobody wants to launch their venture slowly, but it’s important to take your time when choosing investors.
In this episode, Ian and Chad discuss what you should be asking your potential investors, using life lessons from some of the most successful entrepreneurs to determine if an investor is genuinely interested in the health and well-being of your business.
This episode marks the finale of Mission Daily’s investing week. If you like what you’re hearing, be sure to subscribe and hit us up on the socials. We’re also taking listener recommendations for future theme weeks, so if you have a subject you’d like to see an in-depth discussion on, drop us a line on twitter @TheMissionHQ.
To listen to part 1 of this two part discussion, go here.
For the full list of 50 questions that founders should ask investors, go here.
[2:00] A Quick Anecdote About A Famous Entrepreneur
- Steve Blank started a number of companies and was an extremely successful founder and entrepreneur.
- ”As a founder, your business model is your investors’ business model.” -Steve Blank
[3:00] Always Ask Your Investors Who Their Limited Partners Are
- What is a Limited Partner (LP)? –
- “Also known as a silent partner, a limited partner is a business partner whose liability is limited to the amount of their investment in the company. Because the limited partner is not a material participant in business operations, the IRS considers their income as passive income. A limited partner who participates in a partnership for more than 500 hours in a year may be viewed as a general partner.” – Investopedia
- It’s the inverse of asking someone who their customers are, you can almost always judge an investor by who their LPs are.
- “Who are the people that they are beholden to?” -Chad Grills
[6:00] Do You Want To Be Associated With These Investors?
- Investors always boast about their successes. Do you really want to be associated with this person for the rest of your life?
- Mentioned: Brandon Shelton Episode
[9:00] Ask Investors About Their Founders
- Why are they proud of them?
- This helps you determine what they value in a company and what they’ll expect from you in the long-run
[11:15] Ask How Much They Usually Invest
- The different stages of life and the firm’s fund is going to dictate how much they’re able to invest.
- Know the size of the investment you need and choose your investors accordingly.
- What percentage of their fund do you make up? That’ll coordinate with how important you are relative to their other investments.
[14:00] What Type Of Language Does Your Investor Use?
-Do they make definite statements? Do they speak in the future tense about your business?
-”If it’s not definite in your mind…how is it ever going to happen in the real world? Your job as a CEO is to quite literally predict the future.”
-Always think in the future tense, act as if you’re a major company.
[17:00] Ask Yourself: How Desperate Are You For This Money?
- If you can’t be bothered to ask these questions, maybe taking investment money isn’t for you.
- ”You don’t get a black mark for trying and failing.” -Steve Blank
- ”The first person who offers you a check may not be the right person.” -Ian Faison
- Finding investors should take at least as much energy as finding a potential employee.
[20:30] Nobody Wants To Get Rich Slowly
- But there’s something to be said for taking your time raising funds. Slow and steady wins the race.