Some rules of investing in technology companies

I'll do a version of the classic rules of investment and startups some other time but here are a few you don't find in books.

• If there's money on the table - take it!
• You’ll be wrong sometimes but hanging on for a better deal later on seems to go wrong way too often.
• If it feels wrong - it is.
• Don't get seduced by spreadsheets, sometimes the best judge is going to be gut instinct.
• If the team say any of the following you are either going to have to work hard to help them or should leave by any convenient exit (including diving head first through a window if necessary)
• We have no competition
• We’re using the money to pay ourselves salaries
• We know that <insert huge company name here> failed with this product but this’ll be different <insert lame justification here>
• If you think this during the meeting then you’re probably in trouble
• I know more about this than they do
• I can think of 10 companies that have tried this area and they're all dead
• If the team falls out in your first meeting then they’re probably not getting along in the background. I’ve not seen blows (yet) but I’ve seen some major hissy fits. Seriously if the team can’t control itself in ‘public’ then I’m going to imagine the worst in private

These are just ideas – please apply your brain to whether you apply them as you know few rules are valid in every case. Except not arguing with a grizzly, I think that one is pretty good always.

Copyright Richard A D Jones 2005