Who NOT to Trust When it Comes to Investors

One of the most important steps you can take in your startup journey is to find investors. But you have to be careful, you shouldn’t blindly follow just anyone. My video talks about investor vultures to avoid:

There are two types of investors that tend to be attracted to startups: “Vultures” and so-called “Fund Managers”.

Vultures like to go to startup pitch events and ask really harsh questions. They want to somehow belittle the co-founders and make them feel uneasy. After the show, they’ll come up to you after and offer to help you and make everything peachy for like $10,000. These guys are just trying to make a living off startups and doing so in a way that’s just not honest. Don’t trust these guys. If you need to do due diligence, you can find someone to do that. It should never cost you 5 or 10 grand.

Fake Funds. A fund is when a venture capital firm or group of Angel Investors put together money to offer the startup community. Simple enough, right? What’s really happening in some areas is an organization will say “Yeah, we want to start and fund and we’ve already got 10 million!” The truth here is, they don’t have 10 million dollars. They’ve got some other venture capital firm that says they have 10 million dollars and the organization is going to “use that connection” as if the fund was theirs, but it’s not. This is misrepresentation, and these organizations misrepresent not only to the startups but to other investors as well, trying to add to that “fund”.

Be really careful with investors who are quick to announce that they have 10 million dollars. An organization with integrity will raise its own money and make that money available specifically for a startup community that it’s connected to or representing.

My hope is that none of you have, or will, encounter these types of investors. What have your investor experiences been like? Don’t forget to share in the comments!