7 things investors do wrong...

Having laid into people pitching their ideas to investors and resource managers, I was challenged to come back with a blog about daft things investors do to provide some balance.  Well, balance in this case is going to come from a chip on both my shoulders so let’s move into the shadowy and sometimes arrogant world of investment.  A few dont’s and dont’s with the odd bit of personal experience thrown in…

• Never invest against your better judgement.  If you have a bad feeling about investing in people – don’t do it.  You’ll regret it later when things are tough (as they will be at some point) and you realise that the management team should have straight jackets instead of matching polo shirts.
• Don’t embarass yourself by moaning and crying like a little girl (not me honest) when the VC’s term sheet arrives for a company you’ve made an angel investment in.  Yes it’s dramatically in their favour - they always are! 
• Don’t invest if you don’t speak the same language as any of the mangement team and their head man is a slippery accountant.  You’ll probably never figure out exactly how the operation allegedly turns a profit and I mean even with the accounts and a whole lot of concentration I still couldn’t figure it out. 
• Never invest on sentiment.  If a company you are working with has seen it’s shares plunge then assume there’s a reason.  Don’t then invest when the shares go up slightly – it’s known as “the dead cat’s bounce” and will swiftly be followed by a further plummet in all probability.
• Don’t invest in a team that won’t listen.  If you can make a difference to a company’s success then you’ll be wasting your efforts if the team won’t listen.  It’s frustrating and you might as well spend your time elsewhere.
• Don’t imagine everyone has your standards and values.  One CEO was essentially trying to crash a company to pick it up and re-finance it cheap (rumours were going around that the funding was in place for this little scam) but he honestly didn’t seem to see this as a problem.  Sometimes what walks like a duck, quacks like a duck and looks like a duck is a duck and one that is going to get you into big trouble unless you head them off at the pass.
• Don’t accuse the people opposite you of drafting a letter from a potential customer themselves – even if they obviously have.  It makes them grumpy, means they stick around longer trying to justify their (in this case) daft idea and can put you right off your double de-caff, skinny latte.