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Think you are talking to an Investor? Think again

Due to the fact that the Ryan Academy works with lots of early stage companies, we hear lots of stories. The well-worn one is ‘We are talking to a potential investor.’ Indeed.

For some reason, due to ego or hubris or just plain weirdness, there are a lot of people around this town that claim to be investors. I know some of them and have heard or met many others. They raise hopes and often string startups along for months on ends (I heard of one that had been ‘negotiating’ with one such phantom investor for over six months). But these Phantom Investors turn out not to actually have any money and it all ends up in unreturned emails and phone calls.

So how do you check to see if these investors are real or not? Here are some questions you need to ask in that first meeting (remember the deal goes both ways, you have to be happy with them and they have to be happy with you, so asking questions is not a sin):

– When was the last investor deal they did?

– Who was it with?

– How much was it for?

– What sectors do they invest in? (Most investors have a comfort zone of areas they like and/or understand, like gaming or mobile or enterprise software)

Real investors should be able to give you these answers, and even if they are shy of publicity the real ones will give you enough information to check out the facts. Organisations like the HALO business angel network are helping to shine a light in this sector now, even if their investors want to stay below the radar they should be able to clarify if there a bona fide or not. Do your homework.

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