5 Things To Know Before Choosing The Right Investor

An investor can be an individual or an entity or big organization or big mutual fund house. These people allocate their resources i.e. money in expectation of getting higher returns. Their name changes at various stages of investment like- at the very initial stage of investment, they are called angel investors or seed investors.

Every investor who decides to invest in new startups or giant companies in order of getting maximum return should have qualities like humbleness, agility, trust, passion, nimbleness, etc. The combination of these eatures makes them more genuine.

There are different kinds of investors who invest in different financial fields like in equity, derivatives, debentures, gold, currency, commodity, real estate, newborn startups, etc.

Now, let’s understand a bit about the Investments

Investments are long term assets which give huge returns in the future. Nowadays investments are also done for the short-term periods but if we take it to a broader sense generally, we people invest for future purposes and for higher returns. Investments provide financial security towards your financial obligations in the future.

Great investors are those who can get compounding returns from their investments.

Choosing the right investor is not an easy task but also not very tough to take them on board. For an early startup, choosing the right investor is treated as a foundation.

So, let’s jump into the section:

Here are 5 things to know before choosing the right investors:

Who Can Meet Your Needs

You always need to find the investor who can fulfill the financial needs in terms of providing or allocating you the resources which you have proposed in front of them. Yeah, it is for sure that the negotiating processes will happen but you need to decide whether the negotiated proposal still fulfills all your financial needs.

Needs are categorized according to different situations and stages. So, you people need to decide whether these investors are adding values or fulfilling needs at different stages or not?

These questions help you to select the best amongst others.

Who Is Most Experienced

You know the famous proverb that “ Experience speaks”.

It’s true to get the most experienced person on board because they know better than you. But before getting them on board you need to track their records of success in the past. Before choosing the right investor, they should ensure that they have the experience of running, building and helping new start-ups or old big companies.

Getting investors on board not only means getting money to start a business but their experience also matters because they can give proper advice to the organizations through their past experiences of doing investments into different fields. Your investors must have in-depth knowledge of the domain where you are trying to start.

Who Is Aligned With Your Interests & Vision

A great investor will always give you the most priority to make decisions for the better interest of your organization and always respect your decisions. If there is any flaw in your decisions good investors will automatically correct them and always act as a supporting element for your organization.

They will try to understand your long-term visions for the organizations. Having a healthy debate with your investors is good because it gives a clear view of your investors about their thought processes regarding your organization.

You need to self-analyze your investor’s mind that he is only for holding shares and future returns or he actually cares for the organization’s growth prospects.

Who Is The Most Trustworthy

It is the most important characteristic of any investor or any individual that he or she must be trustworthy because trust plays a very vital role in the foundation of any business or organization.

In the initial stage of any business, the rough time comes so, somebody should be there who can back you and won’t leave you in a shoddy situation. Finding an investor who is more trustworthy than you personally feel for him/her will best suit you to get them on board.

Who Can Be A Risk-Taker

There is a proverb “High-Risk High Return”, but nowadays investors need to more calculative and at the same, they must be calm and patient.

To enjoy the higher returns and benefits sometimes everyone needs to take “Risk” but it must be more calculative because if any uncertain loss happens or any situation arises then an investor must be capable to cope with all these situations.

A great investor should always challenge their “STATUS- QUO” to meet the future needs and goals of an organization.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.