In general, always seek out “smart money” investors—people with expertise, experience, skills and the willingness to use them to help grow your business. These investors can provide far more than just a check. They can help with strategy, provide business development leads, help you find and screen employees, drum up customers, suppliers, and more. Investors who have been successful entrepreneurs themselves are particularly beneficial. They know what it takes to start a new business, and will be both helpful and understanding.
A few years ago, I started a business with the goal of selling advertisements and promotions on milk containers. The first step was to secure the rights to the space on the milk containers—effectively little billboards in supermarkets and on kitchen tables. I had zero experience in the dairy business, so I sought out investors with experience in the industry, and gave them extra equity options to serve as advisors. One such investor was a man named Stanley. I remember going to my first meeting with a dairy producer, and nearly getting laughed out of the room. I flew out to a rural Midwestern location for the meeting, wearing a suit that screamed “city slicker.” Somehow the dairy guy found out I graduated from Harvard, which was just the ammo he needed to mock me. “I don’t know how they do things up at Haaaahvard, but here, we….” Ugh. Next time I brought Stanley (and I left the suit at home). He spent the first 20 minutes of the meeting shooting the shit with the dairy guy. He found tons of common ground, like conferences they had attended, people they knew, and problems they had faced. He had the right accent, the right look, the right lingo. When it was time to discuss the deal, the dairy guy was open-minded and eager to explore our opportunity.