# Investor due diligence
- URL: https://www.petrikajander.com/purpose-n-clarity/investor-due-diligence/
- Author: Petri Kajander
- Date: 2022-05-09
- Language: en
- Audio: https://anchor.fm/s/7330d180/podcast/play/50668985/https%3A%2F%2Fd3ctxlq1ktw2nl.cloudfront.net%2Fproduction%2Fexports%2F7330d180%2F50668985%2Ff37c39687182fe728e6bdd29b7211dad.m4a
- Video: https://www.youtube.com/watch?v=0e0iZnsUL2I

Why you should shop around, establish criteria and consider carefully who qualifies as your investor.

## Transcript (https://www.youtube.com/watch?v=0e0iZnsUL2I, YouTube's automatic captions)

[0:03] Welcome to business purpose and clarity with petri I'm your host we talk about startup life insights practical tips mistakes failures and everything between from other people using other people's money well this episode is for you and I'm reminding you and actually asking do you know your investors did you have a criteria when you were selecting them did you select your or did you just take anyone's money if these are like a revelation to you it's quite important that you at least pause a bit and think about these issues now we are in the middle of a real big change in the world because of the russian situation and um a lot of investor money may not be that good money you can see it in many ways either it's directly under sanctions or maybe the values.

[1:07] Of the investors or the people who are managing some other people's money namely hedge funds pc funds might not be aligned with your ideas what's fair and ethical to do even though there may not be pressure from outside public outrage you may still feel uncomfortable with the people you have on board and like in a marriage it's really hard to get out technically yeah you can do it but it's emotionally hard as well this applies to your investors as well you are stuck with them when you take them in it's easier to be more selective from the beginning yeah I can hear you thinking yeah that's really nice situation when you have enough investors queuing on your door so that you can select yes that's one of the cases but there's other cases well when you don't have investors lining up but.

[2:11] I phrase it differently and then you can think what's the answer for you can you afford to take those investors what's the cost of doing business with someone later turns out or even from the very beginning against your values and maybe even jeopardizing your company in the long run is the better way take the money and suffer the consequences or avoid the issue from the very beginning only you know the answer but what I know from my experience of is that it's a really good feeling when you can find people who you can align with you have selected and this is your process this is your sales process you are selling your company you are the salesperson.

[3:15] Doing the work so you should also do the marketing part of it the pre-qualifying part of it actively going after those people who you think are good match for your company because oftentimes I see that it's more like a shotgun approach any investors could invest as long as they give you the money but that's not really the case did you know also talk to each other surprise do you know that they are also hidden or not so hidden but maybe you are just not into loop categories for vc's so if you have certain investor certain vc with you you are actually signaling a lot you're like a lighthouse vegan a siren other investors and if you need to take.

[4:23] More than one round you are knocking on the doors again and you're showing your investors because you cannot hide the fact that you have these other people with you in some cases the doors are closed or they never open to you if you have a certain vc or investors with you companies and people have reputation and if you don't know that reputation well that's on you because you didn't do your work the homework is necessary it's painful it's your company it's up to you how much time and effort you put on selecting the right partners with you so do your db check out whose money they spending talk to the founders entrepreneurs in their more importantly.

[5:26] Talk to who did not succeed with their company how did the investor treat them how did the things go if the company was just a failure didn't succeed but things went smoothly the investor was supportive there was no big issues from this side well that's a good signal if a in quotation marks failed still recommends the investor it's not when things go well you see the true colors of people but it's when the ride gets rough and it will there are too many occasions where the investor blackmail you or try to blackmail you use the leverage they have if you are in a tough spot that happens.

[6:28] Because they can and that is exactly what I'm talking about these are not the things you read on twitter on instagram posts you need to hear them first hand you just need to know these things it is a tough world some people are better some are not that good hopefully you can find the good people who can support you who are behind you and think about uh best and the good of the company and not just they themselves or they fund or saving their investors but just keep in mind the vc model is not aligned with the it's easier for a vc to sacrifice your company it's a numbers game for them you are part of the portfolio but you don't have a portfolio you only have one company.

[7:31] And you don't know how the vc's portfolio is performing maybe they are sacrificing you for a quick exit or maybe they just gave up on you and they don't want to allocate the time for you you don't really know what's happening in there and it's not in your control be careful good luck.