The #1 Rule of Choosing Investors for Your Startup

Finding investors for your startup is tough business, but choosing the ones that will enable your company and your product to change the world is a far greater challenge.

There are lots of reasons for choosing investors. Perhaps they have large reach and influence. Perhaps they have a great track record. Perhaps they are brilliant when it comes to product. Perhaps they’re known for their founder mentorship.

There is one rule you should never deviate from when choosing investors, though. It’s one that too many entrepreneurs break in their quest for the next round of funding.

The #1 rule of choosing investors for your startup: Only work with investors you’d grab a beer with. Some people call this the “don’t work with assholes” rule, but I prefer to call it the Beer Rule.

Investors are just as much a part of your team as your co-founders or employees. You’re going to have to work with (and answer to) these people. You better respect the shit out of them if you’re going to take their money. You better be comfortable enough to challenge them and still be friends after a screaming match if you’re going to take their money.

One other piece of advice: the worst reason for taking an investor’s money is for the money. Always work with investors that have skills, connections, knowledge and insight that you don’t have. Always work with investors you respect and can trust. Life is too short to work with people you don’t like.

P.S.: Replace “Beer Rule” with “Tea Rule” if you aren’t much of a beer drinker.

Image courtesy of Flickr, shaggy359