Recognizing when an investor is a good match

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Getting outside investment is an important step for many companies as they try to grow. But as Business Insider’s Roger Ehrenberg notes, not every investor – regardless of the size of their wallet – is a good fit for every company.

One of the biggest attributes of a good investor, he writes, is being both willing to take an active role in helping the company grow. Because most investors are experienced entrepreneurs, the advice they give is often just as helpful as their funding.

Some of that advice and feedback may be negative, which Ehrenberg says is also a sign of a valuable investment partner. That honest constructive criticism, he writes, can be necessary at many small businesses because employees can be hesitant to disagree with the small business owner’s ideas.

But dealing with an investment group is not something every small business owner should set as their long-term goal. Figures from the U.S. Census Bureau show that just 3 percent of small businesses actually get funding from venture capitalists and angel investors, while others succeed without it.