Charlie O’Donnell over at ThisIsGoingToBeBig.com wrote a great post on the value that the right investors can bring to a company. He uses the case study of Summize vs Tweetscan to highlight how the right investors led Summize to get ahead in the Twitter search race.

This is the definition of what it means to have Smart Money in your deal. Smart Money refers to investors that have insight into your business or industry that can help you grow as a company. Dumb Money refers to investors that can write a check and not much more.

When you’re handed a term sheet where the investor is taking a sizable chunk of your company, make sure you’re taking into account the value of that investor. The right investor can help you grow making the additional percentage your giving up negligible.

While it may feel like investors are evaluating you, you should be equally critical of them. This may seem hard to stomach when your in desperate need of capital, but getting the right person in can prevent you from having your back up against the wall in the future.

Jason D. Schwartz :: Jul.17.2008 :: Entrepreneur ::