I often find that investors with no entrepreneurial experience kinda suck. I mean, if you are giving advice to startups, you really should have at least gone through the highs and lows of an entrepreneur before doing so. Some investors might argue that they are the head of some major MNC or CEO of a big company. It isn’t the same. Climbing the ladder and creating one are two different things.
To improve your chance of succeeding, entrepreneurs need to be picky with investors. Don’t get lured by cash and high valuations. More often then not, it is the connections and the experience of your investors that will make or break your dreams, especially in your first startup attempt. That said, not everything should rely on the investors, and entrepreneurs need to work hard and execute well.
I find that in Asia there’s an imbalance of power between investors and the startups. Investors ask questions like: What experience do you have? What’s your business model? Your break-even point?
But entrepreneurs need to start asking some questions about investors too. A few of the more important questions:
- How can you help my startup?
- What is your experience?
- How would you fit into my expansion plans?
If the investors get flustered with some simple questions, walk away. You know that he is being an ass. Consider inform the community as well so that others can avoid him in the future. The handful of investors who I personally like tend to speak to entrepreneurs like a friend. They don’t have any hint of a snobbish attitude or what I call the I-have-the-money-face.
The good investors were once on the other side of the table (some still are) and understand exactly how hard it is to succeed. They know when to push and when to let go. And it often takes just a couple of coffee meetings to click with special people like those.