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
  • http://www.ppc.org John Rampton

    Couldn’t agree more with you.  You want people who are chill and people that you’d want to grab a beer with.  You really have to respect them.

  • http://www.fused.in Dennis Buizert

    The beer rule applies to a lot of things. And I love this rule so much! So any investor wants to grab a beer with me? I am in New York till Thursday! Oh btw, you are paying. 

  • Anonymous

    Building on this, for companies who offer professional services, I’d extend the rule to “only work with clients you’d grab a beer with.” I tell prospects all the time that I’m not interested in working with people I don’t like. During the business development process, while they’re learning about us and our PR capabilities, I’m trying to learn about them so I can decide if they’re the type of person/company we want to work with. I have a strict “no jerks allowed” policy.

    Heather
    @prTini:twitter

  • http://twitter.com/sasidharan_in sasidharan

    True line, friendly and Skilled persons pour more ideas to our Business

  • Luvbullbreeds

    Absolutely.  Business partnerships rely on synergy more so than do romantic relationships.  If you can’t “hang out” together, it’s not likely that you will be able to do business together — especially when stress gets high.

  • Ryan Gambrill

    Thank you very much for a great article. This really helps validate our theory and solution to this pitfall.

  • Ryan Gambrill

    Thank you very much for a great article. This really helps validate our theory and solution to this pitfall.

  • http://twitter.com/ZenCoder serge

    This of course in an ideal world. But what if you are a startup hungry , nay desperate for capital to expand to beat the competition, and the only one who is willing to give it to you is a guy(gal) who you kinda get along with but would not want to see after quitting time? what if the life of your company depends on it? what then?