- Private equity investment is the highest risk investing in existence. It's higher than hedge funds, foreign oil, or even putting your money into a VC firm.
- You either win big or lose it all - you win if the company succeeds and makes money, if they don't, you lose.
- You are not in control of your exit. You can't choose to get your money back. It’s a privately traded stock. There is no market to sell it to someone else.
- You invest in the leader more than anything else. Do you trust and believe in the leader of the company? If they are good, and they are in control, they will drive the ship to the best of their ability.
- You should invest in something that grows naturally. You can force grow almost any business if you really work hard at it. But some businesses grow easier than others. Choosing a business that has scaling points that are to your liking is a great idea.
- Invest in a leader who wants to grow the company. Each entrepreneur has his or her own agenda and interests. You want to invest in an entrepreneur that matches your values and vision for the company. Some CEO's are great company starters and some CEO's are great company growers. You really want to understand what the entrepreneur thinks success is.
Friday, February 12, 2010
This Christmas I was at a family Christmas and we were talking about investments and PerBlue. PerBlue has taken friends and family investment. A fellow entrepreneur Nathan Lustig, has a great post about raising friends and family money. I just thought I would share some of my more recent thoughts on the subject. This is coming more from the investor's side, and I hope to eventually be an individual who makes lots of small investments in startups I believe in.