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KNOW HOW

How to Be a Good Investor (Because a Lot of Entrepreneurs Aren't)
 

You're smart and savvy. That might be a problem.

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I've seen a lot of successful entrepreneurs fail as investors in start-up companies, most because they make at least one of these mistakes:

1. They invest in good ideas rather than good founding teams.

2. They expect the same pace, the same rush they experienced running a company. When they don't get it, they grow impatient. Then they get destructive.

3. In the hour or two a week they spend on their investment, they try to be the CEO of the company.

4. They invest alone as opposed to in a group with other investors. They don't spread the insight, the burden, or the risk.

Do the opposite.

Accept that you are now the tail, and you are not wagging the dog. Your founders--they are the dog in this metaphor--want your experience, your wisdom, and your contacts. (And your money; that's a given.) Give generously of those things and accept the parameters of your role, and everyone has a chance at success.

As told to Inc. deputy editor Dan Ferrara.

From the November issue of Inc. magazine

CHRIS HEIVLY is a managing director at The Startup Factory, a seed-level investment fund making 10 to 14 new investments per year. In addition to TSF, Heivly is the founder of the Big Top Job Fair and a national writer and speaker about startups and startup communities.
@chrisheivly




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