html

Investors & Money: What's Their Value?

This article dives into the question of how much value investors truly contribute to startups, focusing on the role they play in the crucial area of hiring.

• Investors consistently emphasize their value-add to portfolio companies, but a significant portion of entrepreneurs disagree.
• A study by Harvard Business School reveals that investors contribute to about 18% of executive hires, trailing behind employees and other sources.
• The article suggests a clear distinction: investors primarily bring money, while employees contribute value-add in terms of expertise and execution.

The Money-Add vs. Value-Add

This section emphasizes the importance of aligning expectations with investors. Investors are crucial for providing financial resources, but entrepreneurs should prioritize building a strong team with employees who drive value through their knowledge and contributions.

Finding the Right Investor

The article offers advice on finding investors who go beyond the financial contribution. These investors are:

• Quick decision-makers
• Humble and trustworthy
• Treat entrepreneurs as peers
• Share the entrepreneur's vision
• Invest in the entrepreneur, not just the market

Beyond Averages: Assessing Your Investor's Value

The article highlights the importance of focusing on individual investor-entrepreneur relationships rather than relying on industry averages. Entrepreneurs should:

• Carefully consider the specific value each potential investor can bring to their business.
• Engage in thorough due diligence to assess their expertise and experience.
• Identify investors whose skills and networks align with the company's needs.

Key Takeaways: Investors, Money, & Success

The article emphasizes the importance of understanding the different roles investors play in the startup ecosystem:

• Investors provide essential financial resources, acting as the catalyst for growth.
• Investors can also bring valuable connections, experience, and guidance to the company.
• Entrepreneurs should select investors who share their vision and contribute to the long-term success of the business.

A Note on Hiring

The article stresses that while investors can contribute to recruiting efforts, the majority of successful hires come from internal referrals or other sources. Entrepreneurs should prioritize building a strong internal network to find and attract top talent.