Be Careful with Strategic Investors: You Cannot Have Every Advantage

Strategic Investors Startups should be extremely cautious about bringing in strategic investors, especially investors whose related businesses connect with the startup’s core business. Strategic investors tend to use such investments as a competitive tool, so proceed carefully at every step. The most common situation is that, rather than benefiting from the investor’s strategic resources, the startup faces restrictions that make it serve the investor’s strategy instead. #創業36條軍規 (36 Rules for Entrepreneurs, descriptive title) ---- Robin: ‘There are trade-offs in choosing shareholders. You cannot have everything. A strategic investment from a large corporate group certainly looks attractive: reputation, money, resources. Whether those resources can serve you is another matter. Every business unit within a large group is also a profit center accountable for its own performance. The resources actually provided may not match what everyone imagined at the time of investment. Sometimes the large company is still coordinating internally while the startup has already been labeled as having chosen sides. Corporate groups also invest for their own interests, not necessarily from the startup’s perspective. The startup may end up merely serving the group, affecting its future development, or face greater participation—or interference—in its management and direction. My personal recommendation is a structure combining strategic and financial investors. Find a balance between them and create room for your own startup.’