Many wealthy people could become investors and business angels, but it is hard work – supporting and helping entrepreneurs, finding deals, finding projects and startups to invest in.
It is common to research and vet project founders, business founders attracting investment. But you should also be vigilant when choosing an investor.
If you’re not sure if you’re facing a real investor, do a little research. Research how long the investor has been working, where they live, what is known about their company and values, which business projects they have invested in, and how those companies are doing now.
If the investor has a website or LinkedIn page, that’s already a good thing. Look at his activity, press releases, articles – anything that shows that your potential investor is active in this area.
Be vigilant, you are most likely facing a fake investor if the following happens:
- You are contacted by a person whose name online does not give out any intelligible information;
- If you are not given contact information, addresses, and phone numbers. Be sure to try to reach out by video and phone;
- If the investor offers to take you more money than you asked for;
- If you feel like the investor isn’t very interested in your product, they don’t ask questions, they just say, “I’m interested;
- If the investor says he can’t transfer the money through the bank;
- If the investor asks you to pay bank fees up front. If the investor asks you for money something is not right.
If you’re not sure if your interlocutor is a real investor or not, feel free to ask questions to find out more. A few questions to get a handle on the situation:
- Are there investment projects you typically support?
- How many startups and business projects have you supported in the last year?
- What is your successful investment project?
- Do you invest on your own or with other investors?
You can ask any questions you like of your potential investor about his investment portfolio. If his answers are ambiguous and vague, there is a very high probability that you are facing a fake investor.
