Most startups get to the point where they need to look to outside funding in order to move their company to the next stage. Some use debt funding (loans) while others choose equity funding from angel investors. This does, however, come with strings attached, and you will no doubt have had to hand over a share of your business in exchange for the investment.
This can be a difficult decision for many entrepreneurs, as they have grown and nurtured the company from fledgling idea to going concern. Giving up total control and handing a complete stranger a vote in the say of the running of your business is hard.
How Much is too Much?
Some entrepreneurs feel that they have given up too much in return for funding– that their investors are too invested, too involved in their business. Many don’t realize that when they accept funding from investors, they are essentially taking on new partners who expect to have a say in how the company is run. Outside funding means you now have a board of directors to answer to, and your “baby” isn’t just yours anymore.
It’s also important to remember that investors will do whatever’s necessary to ensure they get the best possible return on their investment – even if this means replacing you as CEO, or forcing you to sell the company earlier than you would have liked. This is part of the process of having investment funding and doesn’t mean your investors are too involved in your company.
Look to the Positives
There is a strong upside, however. Most investors prefer to invest in industries in which they already have considerable knowledge and experience and can actually add more value to your company that just providing funding.
Companies with angel investors who are actively involved in the running of the business actually tend to perform better than those whose investors stay at arms’ length. Angels are usually part of an amazing network of successful individuals and can provide highly useful business leads, as well as mentor, coach and monitor performance.
Their willingness to share their considerable experience in your industry, including technology and distribution channels should not be resented, but rather embraced. Remember that they want to do everything they can to see your company succeed because they’re looking after their investment too.
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