The public discourse in startup land has recently focused on the value add an investor can bring to the table. Value add indeed does make a difference; at the same time though, we tend to neglect the original value an early stage investor contributes to a company. This post is an attempt to bring the discussion back to the basics.
Beyond the terms one receives in a term sheet, there are some inherent qualities in bringing a partner in. Here are the ones I believe should serve as the bare minimum one should look for at an investor:
Swiftness / Make it happen fast
Fast should not be interpreted as hasty, yet, as long as common ground on the basic terms has been reached, the deal should close and money should arrive reasonably fast. Weeks spent in negotiating minor issues, unclear decision making and slow turnaround times usually suggest worse things are to follow.
Consistency / Don’t play games
Negotiations are one thing, inconsistency is another. Startup life is full of ups and downs, so it is better to buy some peace of mind selecting a reliable partner, rather than bring an opportunistic player in. Back and forths, lack of clarity, bold yet unmet pledges are signals of a way of thinking that one shall better avoid.