Do Investors Care that We Have Other Businesses?


3

My partner says that if investor come and ask whether we have other businesses I should say no.

However, I find it strange

  1. While this can be shoehorn into "looking your best" (The other bizs are almost fully managed by my bro) I do not like any kind of insincerity. That includes anything that may be misleading. If something is material I like to tell what it really is and understand others' concern.
  2. The fact is I had many other businesses and successful ones (currently failing but recovering). I am proud of them. They once yielded $5k-$10k per month and can be expanded to $30k per month if I put more attention. Those are not start up in a sense. I am just testing if I can let others manage it. Yet my business partners insisted that I concentrate on this one big thing (which don't make money yet)
  3. Shouldn't they worry about returns, money, etc.
  4. There are so many ways to make quick bucks but my biz partner insist on building this one biz.

What do you think?

Note:

  1. The other businesses do not compete with this business and most of the time self run (managed by my bro). Once in a while I do need to rescue any one of my biz from critical situation. Actually it happened once that during that critical moment I ended up spending time on the main business pretty much screwing everything.
  2. On the main business, I spent most of my time as programming. In Indonesia, programmer is a $500 a month job.
  3. Of course we have other bizs. Who would have the boldness and capability to start something this big if this is his only nest eggs. I don't think I can hide that.
  4. I don't expect to need money or investors. What we want more is connection and valuation.
  5. This is Indonesia, where extremely good programmers worth $500 per day (I think I should pay my one programmer higher). If I look at how I spend my time, I am simply paid more being a businessman than being a programmer, despite the fact that I too can program well.

Investors

asked Jan 28 '13 at 21:30
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Sharen Eayrs
118 points
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  • Would you have concerns hiring a full-time employee know they have another job and intend on keeping it? This analogy only applies if your investors expect you to be available full-time on this venture. – Jeff O 8 years ago
  • Are there any references? I don't want to lie. In fact, I don't want investors that bad either. I am just confused why we're doing this thing that don't make money in first 2 years when there are so many things that make money quickly. – Sharen Eayrs 8 years ago
  • I edited it. No I do not consider lying. I would consider "make it look good" within some limit but I still don't like that. – Sharen Eayrs 8 years ago
  • finally worth removing the comments about removing the comments as I have and will with this :p – Tim Nash 8 years ago
  • Actually, to me, trust is more important than money. Our operating costs are low (except my time) and potential earning is huge. Those other businesses are my insurance to insure that even if there is no investor (something outside my control) the bizs will work. If an investor come and see that I have no other bizs, they would ask, if this guy is so stupid and headlong counting on investor, what other stupidity would he do? – Sharen Eayrs 8 years ago

3 Answers


7

First, lying isn't the best policy. If investor(s) discover the truth, your credibility is shot, and investors do exchange notes (check with each other). Your reputation will either be an asset or liability.

Having other businesses isn't a bad thing if the other businesses are staffed with the right people and growing — in short, your role is either as investor or member of board of directors. On the other hand, having other businesses are bad if they're struggling because your time and attention may be needed.

Answer depends on what stage your current business is at and how it is executing against its business plan.

answered Jan 28 '13 at 23:32
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Global Nomad
326 points

3

Global nomad has a great answer. In addition, investors will want assurance that your other business will not be a source of competition or divert important resources away from your primary venture.

It is reasonable for the investor to require a non-competition/solicitation provision as part of their agreement.

All things being equal, investors may prefer that you are 100% focused on their investment. That said, it is not worth lying about.

answered Jan 29 '13 at 00:31
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Yorick
826 points
  • +1 for Non-competition/Solicitation provision. – Global Nomad 8 years ago

3

I would think so, they figure you are then more distracted and not 110% focused on the business they are investing their hard-earned money in.

I always try to put myself in the investors shoes, I'd recommend it for you as well.

answered Jan 29 '13 at 00:45
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Code Talk
253 points

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