It is typical to think that there is a shortage of money, and a lot of companies are looking for money, and investors can choose companies they want to invest in. But it is not the full story. Actually there are a lot of private investors that are willing to make investments in start-up companies, but they have often very limited deal flow. It easily also means their investment decisions are not so good always. They invest in companies they happen to find. And when companies also might have the same situation, the match is not always the best possible.
Investors want to evaluate companies. They want to see track record, core team CV’s, financial performance, and make a due diligence. But how often companies and entrepreneurs can evaluate investors in the same way. I know business angels that really can be a problem for companies, and they have already caused troubles (e.g. by being besserwissers, trying companies to support their personal interests, or bringing their own friends to companies), but always they seem to find new entrepreneurs who need money. And after a year or two entrepreneurs want to get rid of these people.
What could we do to avoid these issues? At least large deal flow for investors is important. And entrepreneurs need channels to find more investors and get information from investors. So, we can say we need a market place, more information, and transparency.
