Choosing the Right Investor For Your Startup

When your company gains some traction and you suddenly find yourself in growth mode, you may also discover that your cash reserves are dwindling.  But when it’s time to raise outside capital, remember this cardinal rule: All money is not equal. 

Freya Estreller, co-founder of gourmet frozen treat maker CoolHaus, and her partner, Natasha Case, decided to work with an angel investor they believed was a great fit for their growing company. “He'd invested in a cookie company that was a co-packer of ours, so we believed he'd be a good strategic investor,” Estreller recalls.

But the partners were mistaken. While the investor certainly had interests that were aligned with CoolHaus, he was concerned about the day-to-day operations and not willing to let the co-founders make mistakes, Estreller says. “We mistook common interests for common vision,” she notes.

Fortunately, the investor agreed to convert his equity to debt. Estreller's lesson: Be clear about the value, beyond money, that your investor adds to your business.

Estreller and Case recently landed $1 million in funding from former Cherokee Group CEO Bobby Margolis, who's credited with turning around and building that brand. “He thinks big,” Estreller says. He focuses much less on the day to day and more on helping the partners be the next Ben & Jerry’s. 

(taken from this link)