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Amidst capital raise opportunities, the development of investor-entrepreneur relationships are key to having a successful negotiation, agreement, and long-term outcome. However, having witnessed many of these interactions, there is usually value left on the table in the form of expertise and security in the relationship that could bring success in future ventures.
The nature of investing relies on one's intuition of protecting their capital for future reward. For an entrepreneur and their venture, their goal is to take risks and grow. The dynamic opposes one another yet both parties are willing to share assets. Although there is a company and capital at stake, there should be more emphasis on who the individuals are instead of only what a company has accomplished.
Much like when a person walks into a bank for a loan, one of the credit criteria is "Conditions". This includes if the lender trusts and "likes" who the person is or not. Apply this humanistic element to capital raise now. If either person feels comfortable with one another, not only can you have a future reward from company growth and ROI, but also projects after that. An entrepreneur is constantly looking for new business ideas and an investor constantly looks for new diverse investment opportunities. Sharing that journey could be more important than its start.
Investing in the relationship will bring more success than only making the experience a transaction. Wisdom, future project success, and networking/distribution channels are all left on the table with a narrow relationship approach. Looking at some of the strongest companies Company Finder has worked with, not only are the companies promising but the founding teams are personable and open-minded. These individuals look for wisdom that can guide them further than industry specific expertise can. This is where an investor can bring and expand their value from the investing process. As mentioned earlier, investors try to protect their capital. If they provide wisdom and guidance to entrepreneurs, it could protect both parties more than only discussing capital and equity exchanges.
The nature of the investor-entrepreneur relationship in capital raise and new-ventures must have a humanistic element and investment to them. With wisdom and capital from an investor, and new exciting projects by a trustworthy founding team, both parties can align their interests in a unique opposites-attract relationship dynamic.
Written By:
Benedict Ramsbottom,
CMO