Yes, times are tough and capital might be in short supply. But that doesn’t mean you should accept cash from just any angel investor.
Some specific investors he recommends avoiding:
- Suit Slingers, who will threaten you with lawsuits at every chance, knowing you probably can’t fight them and will fold to their demands under the pressure
- Control Freaks, who attempt to leverage every rough patch as an opportunity to get more control and ownership over your company
- Smart Guys, or successful business people who think they know everything already and try to use their position to influence your decision-making, often to the detriment of your company
- Numb Skulls, wealthy individuals who have no business sense and could seriously harm your organisation; these types are easily identified by the superficial questions they ask
- Hand Holders, who don’t really seek financial control but instead must have their hand in every decision you make, big or small.
- Has-Beens, who tend to flee at the first sign of trouble; Zwilling describes them as “former high-fliers with a liquidity problem”
- Brokers In Drag, or deal brokers positioning themselves as angels, who actually have no intention of in investing in your company — instead, they try to convince you to pay them to introduce you to real investors
Zwillig advises, in general, to steer clear of “investments from private individuals and focus on credible, professional angel-investing organisations.”
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