In this brief interview, Evan Carmichael asks Steven Kelly what entrepreneurs should prioritize when selecting investors beyond just capital. Kelly stresses that investors (and even employees or suppliers) should be deeply committed to the founder’s story, willing to put skin in the game, and capable of adding tangible value such as mentorship, industry experience, and strategic contacts. He highlights the benefits of angel investors who serve as non‑invasive board members, coaches, and long‑term partners who can follow a company through multiple funding rounds. Carmichael contrasts this with “dumb money” – pure cash without strategic support – and promotes the concept of “smart money,” which brings contacts, training, media exposure, and customer introductions. Both agree that choosing an investor is a long‑term decision akin to marriage; founders should hold out for a partner who aligns with their vision rather than accepting the first check.
Rishi Kap TV. Hello Evan, hello Steven. Beyond money, what should an entrepreneur look for when choosing the ideal investor? Thank you.
So I'd say definitely in the bootstrapping phase, Evan, I'd say not only the investor, but I also extend this to sort of employees. I love to see companies getting partners, employees, investors Even suppliers, strategic suppliers, kind of putting skin in the game of following your dream, believing in your story and making your business a success. So the sort of things I'd look for, certainly from an investor, and this translates to employees as well, someone who's really committed on the idea, who gets the story, gets the idea that you've got, whether it's a service business, product business, and then more importantly, can add value to the growth of your business. So particularly as an angel investor, I sat on a few of the boards and I chaired a couple of the boards when we started the businesses. And I gave a lot of time to coach and mentor the chief executive for those businesses. And even through to the phase when they are beyond sort of growth capital, as an advisor and a coach to those guys, obviously, you know, I've got 32 years experience in the industry. And there's a lot of guys like me out there who have had very successful careers and they can be really good mentors and they're also non-invasive. Whereas you get into the world of VCs, there's all restrictive covenants they want to put on warrants, but also they've got a seat around the board table and they could be quite invasive in terms of you having the freedom to run your company and pursue your dreams. So I'd look for someone with experience they've got time, they've got, they've got real appetite for your story and support you grow your business and therefore can act as a tremendous coach and mentor as well as the money that they can provide at key stages. And if it works, most of these angel investors I've been involved in go through the distance of multiple rounds. So they go through the whole journey with the firms and the companies as they scale and grow them through their success.
I love it. Uh, in the VC world here, we call the dumb money smart money. I don't know if it's the same thing in the UK, but dumb money is just money, and, and you, you really want that as a last resort, uh, because you want somebody where it's smart money. They're providing contacts, they're providing, uh, information, training, mentoring, open up doors for you, help you get clients, help you get media, whatever it is that you need to help grow the business. You want somebody who is Obviously, yes, passionate about where you're going, somebody you feel you can work with, but somebody who brings something extra beyond it, right? Whether it's those contacts, customers, opening some kind of door for you alongside the mentoring and training. That's what you really wanna look for. And I would honestly hold out until you find that right person, if that's your goal, than just to accept the first check that comes in the door. 'Cause you can't, you can't easily get rid of investors. That's a long-term decision you're making right there. So just like when you get married, You want to make sure that you're making the right decision from the start.
Yeah, Evan, just out of interest, one of the firms I was chief executive of, actually, a couple of times I got a customer to come on the board and be a mentor for me and later an investor. So I kind of think this is a great time if you're bootstrapping your business to think outside the box. Who would you like around the table giving your business advice that's got tremendous insight into the market, the future, the product innovation you're trying to lead, that could give you invaluable advice and give you a real sanity check. So I'd always back smart money, I'd always back people who've got skin in the game and who've got a strong commitment to you and your business growing and being successful.
