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Focus – Risks getting the wrong investor in capital raising
- Published December 20, 2022 4:37AM UTC
- Publisher Callum Melrose
- Categories Capital Raising Tips
As an early stage startup, there are a number of risks you face when raising capital. One risk that I was discussing recently, is the risk of ending up with an investor who doesn’t align with your company’s vision.
This can happen for a number of reasons.
Maybe you didn’t do your due diligence and didn’t understand the investor’s background or goals. Maybe you didn’t negotiate hard enough. Or maybe the investor is simply not a good fit for your company.
If an investor doesn’t align with your company, it can cause tension between the two parties, which could ultimately lead to a breakup of the investment. In worst case scenario, the investor could sabotage your company by forcing you to make changes that go against your core values.
So make sure you do your due diligence when searching for investors and always be prepared to walk away if the investment doesn’t feel right. And don’t forget to negotiate hard – a good investor will want a fair return on their investment, without causing damage to the business and you don’t want to give away too much without getting something in return.
If you have any other tips for avoiding common capital raising risks, please let me know in the comments! I would love to hear from you.
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