So your idea is your passion, your be all and end all? You’re certain it’s going to be successful. You want me to invest, but you won’t?!
What message does that give to any potential investor? Let me tell you. It tells a potential investor that alarm bells should be ringing – not necessarily about the business idea, but about that person’s commitment and ability to make things happen.
I don’t doubt that in many cases the perceived inability to invest is genuine. However, when you have an Angel Investor like me willing to fund the majority of the required investment at a stage when most other Angel Investors will not, experience has shown that those who are truly serious, committed about their idea, and likely to succeed, make it happen. They do whatever is needed to get their part of the investment together – especially when it’s normally a minimal amount.
Investors invest primarily in the person or team rather than in just an idea. If an entrepreneur fails at the first hurdle, especially when there are plenty of options available with a lead investor in place, you must ask yourself what chance that business has if it faces a more serious hurdle later on in the cycle.
When I agree to invest in an idea, I want to know that the entrepreneur I am investing in has a material stake in the business, and is committed to making it work. More importantly, I want to know my investment is as safe as it can be and that the person I am investing in has the ability to make things happen – no matter what obstacles stand in his or her way. The co-investment is therefore never about the amount, but about trying to determine how resourceful and committed a person really is.
Forewarned is forearmed!