Your Startup Can Be Wrecked By a Single Investor
Most investors are good. Some aren’t great. A few are ticking time bombs.
In this week’s issue of Teaching Startup (#70), I answered a question from an entrepreneur about whether or not to walk away from an investment deal that was becoming more of a hindrance than a help.
As a rule, I don’t tell entrepreneurs whether or not to seek outside investment or who to take money from. But I can tell you that there are two schools of thought about taking investor money, and without nuance, they’re both bad advice.
That’s what I want to get into in this post.
Outside investment is neither “good” nor “bad”
The two schools of thought I’m referring to are that outside investment can either be:
- Good, or
- Bad
On a case-by-case basis, neither generalization is true.
In a vacuum and without context, I usually come down on the side that a founder should never take outside investment unless it’s the only alternative remaining to bring on the minimum necessary resources to achieve an almost-certain next level of growth.
