Why is picking your investor so important?

Answered by: Ravi Mohan, Managing Director

Category: Partnership & Fundraising

Ravi Mohan discusses why picking investors is one of the most important decisions an entrepreneur makes:

It's the most important decision that an entrepreneur makes, because it's the only decision that they cannot undo. Every other decision is reversible. If you and the co-founder aren't working out, and the co-founders are not doing their jobs, you can actually exit the co-founder. But unless you can buy out the venture, the investor, you are stuck with your investor. And so, really understanding the gravity of that decision, and really ensuring that you're choosing the right partner for what you want to accomplish is, I think, the most important decision an entrepreneur can make. Or, at least make that decision with full knowledge of the pros and cons of the partner you're working with, whether it's the firm, or it's the partner. At Shasta we believe that our differential advantage is that we are better partners to the entrepreneurs in the most meaningful manner. We help them build their company successfully through good times and bad times, and we really have
the interest of all the stakeholders in mind. That mindset really governs the advice that we give to entrepreneurs and what we care about in difficult situations. The first job of a venture capitalist is to do no harm. Then it's to help navigate the complicated decisions. And there's only three or four: How much money should you be spending in a year? What are the two or three things you should be spending that money on? (That's an annual decision). Do you have the right person running the company? Are they up to what's required for that company to be successful? And then, should you accept an exit opportunity? Those are the key decisions.