Having identified investment as a route and knowing that you’ll be focusing on the parts of your business that bring growth according to your investors, what do you need to be aware of when considering what goes in the contract with the investor?
The best way to answer this is really to meet a bunch of other entrepreneurs who are a few steps ahead of you and have lessons you can learn from. However as a few catch all areas, consider things like:
- who owns the IP if the company fails? Investors might well want to have this transferred to them as a way of clawing back some of what they’ve invested
- are you risking the roof over your head? Banks generally want loans to be secured against substantial assets once you get beyond personal loans territory so consider whether you want to risk this
- consider how the role of the board of directors changes, particularly if one or more of them are representing the investors’ interests
- and finally be aware that investors won’t take kindly to a Porsche as your company car unless you’ve already made them a substantial return i.e. you need to put their interests ahead of your own!