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Founders naturally want to know what to expect when accepting money from an investor. There are many different shades and colors in this industry for entrepreneurs to choose. But one commonly referenced dichotomy is whether an investor is “hand-on” or “hands-off.”
A hands-on investor is someone that likes to get deeply involved in the business. They pride themselves on being just another member on the executive team, and want to roll up their sleeves and work next you. This can be a huge plus, especially for founders that want to be guided. The downside is that these investors tend to have overhead costs. They may want to meet frequently and receive updates every week on how things are going. They can be particularly vocal about how they feel because they are working so closely with you. For founders that prefer to run their own business, these investors can come off as overbearing –even if they have good intentions.
As you’ve probably deduced, a hands-off investor is the opposite. They write you a check, wish you luck, and then you hardly hear from them. Either they are too busy to monitor you closely, or they just want to let you run your business. Either way, that is their style. It is an approach that can be perfect for an entrepreneur that just wants an investor to wire them money and leave them alone.
So, which one are we? I hadn’t come up with a good way to articulate our style until recently. The short answer is that we are somewhere in the middle. We are “hands-if” investors. As in, “call us IF you need us!” We get deeply involved in areas where founders express that they need help. Instead of routine meetings, we’re frequently in touch over Facebook Messenger, trying to resolve issues in real-time. While one company might need help fundraising, another might need help hiring, and another might need help with their stock option pool, and another might need help polishing their pitch, and another might need introductions to clients.
Ultimately the right style depends on the entrepreneur. Hands-if might not be the best for everyone, but it was the style I wanted when I was a founder.