investors, seedI believe raising half million each from 4 investors better than 2 million from one investor.
This is because I can get wide range of connections from all of them.
Is there any other reason to go with 1 investor? e.g: voting rights, board seats etc.
I’d generally prefer to have 4 investors than 1 for the reasons you describe. However, all deals are different and all people are different.
It may be that you need the money quickly. In which case dealing with 1 investor rather than 4 can be far quicker.
Or one investor is willing to give a far better valuation and deal terms than the others combined.
It could be the investors themselves don’t get along or can’t work with each other.
A sole investor may be wishing to come onboard and fill a gap in your staffing rather than simply invest and as such requires a larger equity stake.
These are just off the top of my head. All deals and situations are different and worth looking at, as the default of what is ‘generally better’s may not fit with the specific individuals involved
Depends on your personality. If you are an easy going guy and don’t mind taking lots of feedback better to go to 4 guy. You will have more brains looking at the problems.
However if you are difficult to work with and really know that investor and trust him go for the 1 guy.
If you have a chance to go for non institutional investors regardless of the numbers go for that one.
This is a long journey and you need people who can help you not breathing down your neck. Professional investors are very cut and dry and they will play the game at a different level and it is not always be aligned to your wishes, passion etc.
As already mentioned, it depends.
The investment an investor can give to you is not only money, but also expertise and connections and, pretty importantly, time. If you go with only one investor, the company could mean more to him and he will have a greater interest in making it succeed, because his initial money investment is larger and because there is no other investor who could help you.
On the other hand, going with 4 investors could open more connections for you and, depending on the investors, also more support. But this is completely dependent to the investors and what you can handle better.
Best Regards
It depends according to your startup. let’s say you are working on this project alone and somebody willing to invest and be your co-founder then it’s okay to go with one investor. when choosing the investors don’t just look at the invest try to see their previous profile in the business and other attributes as well.hope this might be helpful.
I spent the past 25 years launching, buying, building and selling private equity and venture capital portfolio companies, so I may offer a different perspective.
As others have highlighted here, the real value depends on what you are exchanging for your equity – beyond capital. If a single investor can help make more connections and open more doors to facilitate growth than the other four could in this scenario, even at less advantageous terms, that may be in your best interest. I’d rather own a smaller position in a more stable and valuable asset with better growth prospects.
It also depends on what stage in its lifecycle the company is in, and who the current stakeholders are. Early stage, mature or distressed businesses may benefit from more “patient” capital. It may be tempting to accept “dumb money,” investors with little or no experience or strategic connections in your market, but a startup may find itself wasting significant time and missed opportunities if its leadership needs to placate micromanaging shareholders.
I have held interim roles including CMO, CFO, CEO and board director with P&L responsibility from $1 million to $1 billion, across a diverse range of vibrant markets and global territories, and these important considerations are consistently valid.
It’s also true that money attracts money. Professional investors often make decisions based on who has already bought in, so be selective. Entrepreneurs may not wield much influence, but we always have the power to say no.
Business owners and leaders are faced with an endless stream of problems to solve throughout the lifecycle of their businesses, but your scenario is a nice problem to have.
All content is licensed under CC BY-SA 3.0.