I need to know if he is a good or bad investor...

Hi Vic!
We’re trying to find an investor, the project is about to hit the market and we need a final push ^^.

It’s our first project, and we’re afraid of the “investor weirdos” out there. Knowing you’ve direct contact with “real” investors, may you share any tips to help us detect fake investors?

Thanks a lot! RosaEmprendedora

This is, no doubts, one of the most frequent asked questions, and probably it’d need several blog posts. However, there’re several signs that should alert you when talking with an investor. Hope this helps you to distinguish “himbestors” from real investors.

1 – The investor approached you in an entrepreneur event.

There are real investors who joins entrepreneur evenst but, with few exceptions, most of them are usually “himbestors”. Main reasons: An investor doesn’t have time to join this kind of events (or he doesn’t want to be part of such pain in the neck), he has zillions of projects knocking his door directly (why joining an event to find them?) and last, but not least, waiting your approach puts him at a better position in a potential deal.

2 – The investors seems interested in your project but he doesn’t ask you about how much (or what) you need.

Usually an investor will ask you details about your project. It would be pretty odd otherwise. However dull “himbestors” will try to avoid asking you 3 key questions: How much do you need?, Which is the return of my investment?, When will your bussiness break-even?

Add +1 in the “himbestor” balance for each of the previous questions not asked. There are really dull “himbestors”.

3 – The “himbestor” seeks his own benefit. The investor seeks the benefit through your company.

Maybe you’ve always heard investors seek their own benefit. That’s true (obviously), but not totally right. An investor seeks such benefit but thanks to your (and now his) company. Basically when he invests he is becoming a co-owner of your startup, so if the company moves forward, he wins, but if your startup shinks, he loses. Investors don’t expect your startup to be profitable in the short term (its first year) but in the medium and long term.

An “himbestor”, however, seeks his own direct, instant, benefit. If you feel an investor is puzzled about your company not being profitable the first year, and he presses with questions about it …run away! He is preparing the game field to show himself and, probably, to sell his services.

4 – Which is your 5-year Business Plan?

There are tons of investors reading this blog, and they can assure you that 90% of the 5-years bussiness plans predictions of the startups they’ve already invested have never been met.

An investors is going to ask you to tell, and explain, him your 5-years plan. But his main objective is to know your team better and to understand your strategic vision. He is not really interested in your crafted numbers.

An “hinvestor”, however, will keep asking about your 3-years and 5-years numbers, he will even tell you in loud voice he doesn’t trust such numbers. There are better ways to understand the viability of your startup and he is missing them.

So, if 50% of the talk is spinning around the credibility of the numbers of your business plan, slam the door in his face. Breath. You’ve just discover an “himbestor”.

5 – Talk evolves in the wrong direction.

Don’t let him to unfocus you from your main objective. If you feel the conversation has slowly evolved from a “I have the money you need” to “I can try to find the money you need”, you’re in front of an “himbestor”.

His next sentence will be asking you a % of your startup in order to find for “sure” the investment you need due his “abroad expertise, blabla, chit-chat here, blublu”. Or maybe asking you a % of your company to pay his finantial/marketing/legal services (“I will make an unbeatable business plan for you”). If you’re trying to find money, then…he is not the guy.

Beware! I’m not against quality broker/agents nor entrepreneurs who can add a plus to your project. But if he approached showing himself as an investor to catch your eye…then…You-Know. Runaway! 🙂

6 – He asks you for your secret recipe.

Investors are not copying entrepreneurs’ ideas. They don’t have time, nor willing, nor…for such. That’s why they won’t never ask you for your “secret recipe”. If your startup in an online store to sell cakes, the investor will be mainly interested about knowing where, how and for how much you’re going to sell them. He is not going to request the source code of your online platform, nor your secret cake recipes. Probably (not initially but during the negotiation process) he will request a 3rd party technical report, or a piece of cake to test/taste it, or some pictures of them.

However, there are shameless-mugs hidden behind the “himbestor” mask (usually failed entrepreneurs and really short-minded ones) trying to “find” ideas. If you find an “himbestor” asking YOUR Coca-Cola recipe…move on. And move on not because the fear to be copied (if he failed is probably because his attitude and he will fail again) but because your time is money and you are losing it with an “himbestor”.


Hope you’re really succesful with your startup! Btw, if you give me an interesting % of your startup I could…(naah…just kidding).

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