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Inside the Investor/Investee Relationship

The March 15th New Enterprise Forum (NEF) meeting in Ann Arbor MI  brought together a stellar panel of both investors and entrepreneurs to discuss making the right match between a company and an investor.  This panel speaks from a wealth of experience and has wisdom that can save both investors and investees lots of time and energy.

Christine Gibbons, HistoSonics

  • Make sure that your investor shares your vision – talk about the business plan, just don’t hand it over and walk away
  • Set up proper expectations – agree to milestones and value creation strategies
  • Evaluate any prior start up experience on both sides – what did they do if the going got tough?
  • For the investor, what is their depth of understanding of the market place and does their extended network benefit the enterprise?

 

Andy McColm, Early Stage Partners

For entrepreneurs:

  • do your homework:  if you are talking to the wrong investor, you are wasting everyone’s time
  • Use resources such as :fund:it (but don’t believe everything you read)
  • Do they have an investment in a competitor company?
  • Talk to CEO’s of other companies this investor has invested in
  • Be open and honest – you are forming a partnership – and if a skeleton comes out of the closet, as it surely will, it could ruin the deal, whereas an upfront conversation at the beginning would not have been a deal killer

 

David J. Morin, The Advisory Board

  • Be aware that some investors are tire kickers – a sign of this is multiple meetings without any forward progress
  • How well does the investor know your space – will you have to spend a lot of time educating them?
  • Does this money bring with it value added – can bring other market, team or investor contacts along with it?
  • What degree of communication is expected?  If you want to send a monthly report and the investor wants a weekly meeting, this is not a good fit

 

Skip Simms, Ann Arbor SPARK (MI Pre-Seed Capital Fund)

  • Ask where the VC is in their fund.  Are they actively seeking to place funds or at the end of the current round and maybe just starting to line up the next fund?
  • Keep the investor informed – at least quarterly reports

B2B CFO®

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