Being desperate for money to fuel your app idea may land you with dubious investors if you are not careful. But, hold on – they are investing money and I am getting money – so what is the problem? Well, read on…
You have to do proper research on your potential investor by examining their profile, values they adhere to,and their management style. Whether they are VCs, angel investors, friends and family; due diligence should be paid in choosing your investor.
This is an important and time taking action which you should carefully and deliberately do. If something goes wrong with the investor or funding, the dream of converting your app idea into a wonderful app will continue to stay as a dream
Take care to stay away from the following types of investors.
1. Litigation-loving Investors
These are a dangerous class of investors who love to litigate and make money. They love to take advantage of your credit-starved condition and incapacity to fight in court. They will resort to bullying and lawsuit threats with the sole intention of making money.
2. Overly-Smart Investors
Investment sharks and rich angel investors can act overly smart, since they hold an unusual level of superiority feeling. They might become nettlesome by criticising and passing finicky comments on every decision you make. They want to cast a domineering shadow on you. They love to take advantage of your dearth of experience in striking financial and business deals for their benefit (as against mutual benefit)
3. Investors With Controlling Trait
This type of investors are characterised by a colossal amount of ego. In the initial stages, they might appear as a well-wisher. But in due course, they will show all the signs of a dictator, trying to be in command in terms of the investment. They will also try to control all the future strategic decisions of your mobile app business. It might also place them in a situation to own the company themselves.
4. “Conditions Apply” investors
These are a peculiar type of investors who will invest in your business only if certain ‘added’ and ‘exclusive’ benefits are promised. They always carry a ‘strings attached’ attitude. They will put conditions to invest. They might seem very friendly and even introduce you to some other investors. They will be associated with you only if their special demands are met. Stay away from them to avoid future headaches.
5. Investors who resort to unwanted handholding
These investors will love to act as a great support for you in dealing with the app building business. They will act as guides and advisors even if you can manage the situation yourself. They will interfere with every troublesome issue by trying to handhold you at every point. This will eventually become an annoyance for you.
Try to understand these types, and make sure which types you can manage. In general, it is wise and advisable to stay clear of these types of investors while seeking for funds to run your start up.
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