Ask potential investors what experience they have in your industry and business type. Can they add value to help you move to the next level of success? “In addition to their checkbook, do they bring their Rolodex and their industry expertise?” Griffith asks.
Their answers will tell you a lot—and so will conversations with the senior management of other companies where they’ve invested. “Push them to tell you the other companies they’ve invested in, and contact those other firms to find out what this investor is like to work with,” Knopf says.
You should also ask those other companies how investors have handled business downturns. “Are they quick to change management at the first sign of a hiccup, or do they have a history of partnership with their portfolio companies?” Griffith asks.
This research can make the difference between keeping control of your company and ceding that control to someone else—and in the end, keeping control is the goal.
