Small business investor - small check, big headache


Published on

To find angel investors, you need to strategically plan how you are going to go about it, Get quality information on how to develop a plan that is sure to get investors on your side. Discover the entrepreneur in you! Visit http:/ for more.

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Small business investor - small check, big headache

  1. 1. Small Business Investor – Small Check, Big HeadacheSmall Business Investor – Small Check, Big HeadacheTo raise capital, angel investors are key to yourbusiness. Find out how you can develop a strategicbusiness plan that will help you source funds frominvestors. Read More
  2. 2. Small Business Investor – Small Check, Big HeadacheI dont know if there is some sort ofmathematical equation you can put tothis, but it would certainly appear thatthe smaller the investors check, thebigger the headache they become to anentrepreneur.You might think the opposite would betrue, that smaller investors would onlyexpect to play a minor role in thebusiness while the larger investorswould make all of the important calls.What youll find in practice, though, isthat raising and managing small chunks
  3. 3. Small Business Investor – Small Check, Big Headacheof capital from small investors isincredibly laborious while the moremanageable investments come frommuch larger investors.Less Money = More TimeSmaller business investors seem to havedisproportionately more time to investthan they have money. These are theguys who are putting $5,000 into yourcompany and think theyre GordonGekko, trying to run the company likesome big time investor. All this extra
  4. 4. Small Business Investor – Small Check, Big Headachetime that they have to manage theseinvestments actually sucks the life out ofyour deal because you have toconstantly manage their expectations tothe nth degree of detail.Certainly getting help from a smallbusiness investor to grow your businessis a nice thing, but not if it involvesbeing micro-managed to death overevery decision. A good small businessinvestor will understand that their role isto invest in the company, not run thecompany. You want their invested
  5. 5. Small Business Investor – Small Check, Big Headachecapital working for your business, notanother pseudo manager to contendwith.Small Checks Take LongerRaising smaller amounts of capitaldoesnt translate into reducing the timeit takes to get a check. In fact,sometimes the smaller amounts takemore time because the people writingthose checks really cant afford to invest(read: gamble) that money to beginwith.
  6. 6. Small Business Investor – Small Check, Big HeadacheThey need to be certain of every lastaspect of the deal to the point wherethey over-analyze the deal completely.Before you know it, youre jumpingthrough all of these hoops over a fewthousand dollars. Its a huge waste oftime.Even if you do manage to land thesesmall business investors, you can becertain hes going to be on the phonewith you every 15 minutes trying to geta status update on his investment. Hes
  7. 7. Small Business Investor – Small Check, Big Headachegot the time, and the investment isincredibly meaningful to his overallpersonal wealth. Youve become hisliving, breathing stock ticker that heconstantly wants to see updated.Big Kids Run FasterBelieve it or not, it actually takes just aslong to raise larger amounts of capitalas it does smaller amounts. Thatsbecause the larger investors (the bigkids) tend to have less time to spend onany one deal. They have lots of deals to
  8. 8. Small Business Investor – Small Check, Big Headachechoose from, so they have to get to thepoint quickly and make a decisionquickly.For an entrepreneur raising capital, thisis the best thing in the world. Ideallyyou want as much flexibility with thecapital that you raise as you can muster.You want an investor who paysattention to the important points of yourgrowth, like monthly earnings, not dailyexpenses. Thats what youre there for!
  9. 9. Small Business Investor – Small Check, Big HeadacheThats why a bigger investor is usually amuch better option when raising capital.They can make decisions about theinvestment faster, they can fill up yourinvestment requirements faster, andthey can leave you the heck alone sothat you can grow the company a lotfaster.Too many cooks in the kitchenWith fewer small business investors youalso overcome the problem of "toomany cooks in the kitchen". Startup
  10. 10. Small Business Investor – Small Check, Big Headachecompanies need to make lots ofdecisions very quickly and decisively.The company runs a lot better as adictatorship than a democracy. Themore votes you create by adding moreinvestors the longer the processbecomes to make a decision.You can overcome this problem bygiving certain small business investors"voting rights" and giving other smallbusiness investors the right to keepquiet, but dont kid yourself - youregoing to hear from the guys who dont
  11. 11. Small Business Investor – Small Check, Big Headachehave voting rights whether you like it ornot. So the best antidote is to simplyhave less people at the decision table.Less is MoreAs youre thinking about raising yournext round of capital, dont think interms of lots of small business investorswith a little capital - think in terms ofone (or two) investors with a whole lotof capital. You dont score anyadditional points for racking up thegreatest number of investors. If there
  12. 12. Small Business Investor – Small Check, Big Headacheare any points to be scored, its fromgetting as few investors as possible inorder to get your requirements fulfilled.When growing a new business, everymoment of your time has an incredibleamount of value. The more time youspend placating overzealous smallbusiness investors, the less time youspend doing what you all came there todo in the first place - growing thecompany!Read more
  13. 13. Small Business Investor – Small Check, Big HeadacheWil Schroters latest book "Go BIG or Go HOME - How the next generation of startup companiesthink BIG, grow FAST, and dominate markets overnight" is available athttp://www.WilSchroter.comAbout this AuthorWill Schroter is the Founder and CEO of the Go BIG Network, the largest network of startupcompanies and entrepreneurs. He is also the author of the new book “Go BIG or Go HOME”,download it for FREE at www.gobignetwork.comArticle Source: