Adam Lilling is a Serial Entrepreneur & Investor (http://www.lilling.com/). In this video he talks about being aware of the strategic investor.
- Strategic investor: investor that adds value from industry & personal ties
- Strategic investors have their own agenda
- Gain intimate knowledge of your business
- Don’t take the investment, just sell
I was very fortunate in my first company where I did receive the strategic investment from a very large company. I'm fortunate and also unlucky at the same.
Strategic investor sound great. They understand your product. They understand what you're trying to do. They are the first to understand it. But they have their own agenda. And a lot of times, they're going to hijack your development cycle.
They're going to want what they need more than what you need as your own company. They're also going to get intimate knowledge about your business. You're going to teach them about what you're trying to raise in front and win at.
Really my advice is don't take the investment. If you can't get a venture capitalist, if you can't get friends and family and these are the only people that would give you money, you're better off trying to get them to buy your company. Because they're going to end up taking over your company anyway with what their needs are. You might as well join them and go build this together.
The idea of a strategic investor is great. If you've already got investors, if you've already got momentum, if you want them to be investors because they're going to help be great partners as you're expanding the product, go for it. But if you are new to this business, if you're just getting started, beware. The strategic investor is not really the best place to go.