Let’s Have an Honest Talk About Shady Startup Investment
“Is this investor for real?”
I get that question a lot. Definitely more than I should. Because my answer is always the same and it’s always some form of “I don’t know.”
Everybody wants the dream to happen to them. And every entrepreneur — I don’t care who you are or how long you’ve been at it — longs for that day when unsolicited investor interest comes knocking and suddenly a game-changing idea becomes a funded reality.
Sure. It happens in real life. VERY Rarely. But it seems like it happens a lot. All it takes is a quick read through one day of TechCrunch’s twitter feed to make it feel like anyone can attract a little Sand Hill Road interest and parlay that into a quick few million dollars of runway.
But what happens more often is just a mirage. Shady investment opportunities can come in all shapes and sizes, and they can strike any kind of venture at any time.
Lately, they’re getting more sophisticated. So much so that sometimes even I can’t tell the wild goose chases from the honest-to-goodness opportunities.
But you can. Here’s how.
Proper Investor Research Isn’t Always Enough
Look. You don’t have time to chase investment. Even real, accredited-investor-backed opportunities take tons of time and mental energy to drag across the finish line. That’s time and energy not spent building a better product, forging a broader market, or maintaining the head start on your inevitable competition.
In this week’s issue of Teaching Startup (#85), I answered a broad question about investor research and the right way to get started with a fundraise, covering everything from tracking tools to cap tables to relationship advice.
In the answer, I told a quick anecdote about just having received an inbound investment opportunity for Teaching Startup itself (and since I wrote that answer, another completely different opportunity showed up in my inbox). And I couldn’t tell, even after 15 (wasted) minutes, whether these meeting requests were the real thing or…