I'm an entrepreneur. But I'm also an investor.
After 18 years of building my first company Wilmar, I decided to sell half the business to a private equity firm. This allowed me to take some money off the table and de-risk, while providing the financial support and guidance to take the company as a whole to the next level. A year later, we took the company public and had investors of all sizes involved.
This was not the typical "search for investor" scenario that is typical, and pretty rare for a business. Most of the ones I communicated with were very large institutional investors. But it gave me a good sense of what it's like being on the "other" side of the table.
Conversely, throughout my career I've acquired and invested in over 30 companies. Some of these were startups I found promising. Some were growth companies when I was in private equity. And some were companies I've flat out acquired to help grow my own businesses. All of these experiences helped me see things from the other side of the table, as an investor.
When I decided to bring in investors for my current business, LendingOne, I was extremely aware of what I was looking for--because it wasn't really money. Sure, extra capital can always help, but I was far more interested in intellectual capital, relationships, and experience in an industry I didn't have myself.
As someone who has been through all the ups and downs of building a business and looking for the right type of investors, here are the three qualities I look for in a partner:
1. Relevant experience.
Some people call themselves investors because they invest in companies--and that's where the relationship stops.
They write you a check. They tell you to give them an update once a quarter. And they leave the rest to you. Truthfully, many of these types of investors may never have been entrepreneurs before. These could be retired traders, successful lawyers, or someone who just happens to have access to disposable capital. While there is certainly something to be said for having an investor leave the business decisions all to you, finding someone to write a check isn't the hard part of securing an investor.
Lots of people write checks. What you want is someone with experience.
And not just "experience" in the general sense, but relevant experience to what it is you're looking to build. For example, when I started LendingOne, I needed investors who had experience in the financial sector. Specifically, those with real estate or debt and lending experience. An investor who had made money in the restaurant and food space wouldn't have helped me very much.
2. A strong network (and they're willing to share).
The second thing you want to look for is someone whose network can open dozens of doors for you.
When an investor comes on board, they'll most likely make it clear how much time and energy they'll be willing to dedicate to your business. Some investors just want to write a check and have minimal involvement. Others want to have skin in the game and be part of the building process.
Regardless, what you want to look for (as an entrepreneur) is an investor whose network can provide exponential value to you and your venture. For example, let's say you're in the media space. If you bring on an investor who has key relationships across a variety of major media companies, those are value adds you get beyond just a check.
And that's exactly what you want.
3. A shared vision.
And finally, the third quality I look for in every investor is their ability to share in the vision.
As an entrepreneur, what you're building is yours. Your company is trying to solve something that you see as an opportunity, and you believe will provide significant value to the market. If you bring on an investor that doesn't see things the same way you do, that can become a problem. Depending on how much equity they end up owning in the business, their preference might be to start telling you how to run your company--and that's not a situation any new entrepreneur wants to find themselves in.
Something I talk about a lot in my book, All In, is this idea of knowing when to bring on certain partners, and how to spot some of these qualities from afar. At the end of the day, you always want to bring on investors that will challenge you to see things from a different perspective, or show you things about the industry you might not be aware of. But as soon as the relationship dynamic turns into them telling you which decisions to make, they're no longer investing in your vision.