What to Consider When Looking at Potential Investors

Posted by: Today's Tip Contributor on March 06

So you’ve made the big decision to look for an investor to hold a stake in your company. The timing is perfect—you don’t need the capital just yet, but as the business continues to grow and develop, you know it will be necessary. As your search for the perfect investor begins, what should you take into account?

The first item to consider is what type of backer you need. Look at what a potential investor can bring to the table—in addition to cash—that will help you grow. Another item to take into account is the length of the investment period. Will this be a long-term partnership or a short-term investment? You should also reflect on the size of the investment needed. Lump sum? Gradual over time? Perhaps the most important item to consider is what your overarching objective is in obtaining the financing. Are you looking to take your company public? Or perhaps you’re hoping to get bought by a larger company?

Considering such issues in the beginning will help you narrow down the field of investors and make sure your company gets the type of funding it needs.

Peter J. Boni
President and CEO
Safeguard Scientifics
Wayne, Penn.