Are Entrepreneurs looking for Partners and Investors in all the wrong places?
Often times Entrepreneurs do not stay curious, they become masters at limiting their own growth and Investing is not a priority. This post will share why you should always keep learning and keep expanding in your own business space. There’s always another level if your willing to take the time and learn. If you are a serious entrepreneur, managing partner of a fund or apart of a Investment Group? There are qualifying questions you must ask to justify the start of a Business relationship with sophisticated investors. And just so people realize this point. Me or my Partners do not just talk to anyone with a few hundred thousand bucks. But if your a serious entrepreneur that has a interest in financial services and joining the Major Leagues of Business investing this is an article you will want to definitely read.
Interestingly last week I met with a Kansas City Accountant from BKD which is a large Transaction advisory Accountant firm in Kansas City. We spoke to each other about attractive investment assets to buy. And must use personal discernment and be very selective and understand the business before investing. If a Investor brings to the table One Hundred Thousand or Fifty Thousand Dollars with no background as a Professional subject matter expert, Accountant, Attorney, or Enterprise Board Member? The answer is a fast but gentle “No Thank you I would not be a good fit to partner with you.” The reality is there are people who have money. But are not accredited investors. Choose your partners wisely.
Their are Non Accredited investors and then Accredited investors. There’s a big difference. And that’s one reason I am writing this guide to share the 3 levels of Accredited Investors for serious entrepreneurs. We will get more into this later.
I must be share there are literally many Con-Artists and Fraudsters in Financial Services. So you must pay close attention to who you consider a professional inside Financial Services & Investing. This article will also give you incredible insights on what to look for when looking for qualified Investors as partners.
Unspoken Rules in Professional Investing
Ok in the Big Leagues of Professional Investing it’s likely that if your not referred by a trusted friend, Board Member, or Corporate Officer/Executive or someone who has a Professional Investment Track record? You don’t entertain any conversation with this person. It honestly is a closed society and sort of Mafioso.
Investors are anything but alike
This will honestly probably disappoint many people in my community. I do not partner or accept money from Non Accredited Investors. But the truth is there are only 3 types of Investors I would choose to partner and work with. I will absolutely go more into detail about these 3 types of Investors. You may want to know this interesting fact from DQYDJ.com This potential investor group is not as small as you think.
We estimate in 2020 there were 13,665,475 accredited investor households in America. Roughly 10.6% of all American households were accredited in 2020. Further, accredited investor households controlled roughly $73.3 trillion in wealth in 2020. They controlled around 76.3% of all private wealth in America measured by the 2019 SCF.
DQYDJ Investment Homepage.
3 Investors Who Should Be On Your Radar
But first let’s look at some basic guidance to keep you safe along your journey. Fund managers live by this guidance, and so should Entrepreneurs. Even though your preferable investors are High Net Worth Families and Individuals, you should keep this at the forefront of your responsibility as a Professional Investor or Entrepreneur.
- Never accept one dollar from Grandma’s One hundred and Fifty Thousand Dollar life savings.
- It’s your fiduciary duty to ensure the person who partners with you has a level of sophistication to understand the risks of start-up investing.
- It’s preferable to avoid Start-Up Capital Intensive Businesses as a Entrepreneur
- It is also very important that you do screen out and disqualify Investors who are not Financially Literate
- It is imperative Entrepreneurs must study and get familiar with Federal Securities Law
- Have a Business Attorney as someone who can watch your back and advise you along your career.
- Have Advisors you can turn to as a Professional who can introduce you to someone or give you pro guidance.
- BE A COMMUNITY LEADER – Take responsibility for people who don’t understand what they are asking.
- Don’t be a FRAUD, ALWAYS BE TRANSPARENT, and NEVER EVER BE DISHONEST!!
The Accredited Investor
The SEC defines an accredited investor as either: an individual with gross income exceeding $200,000 in each of the two most recent years or joint income with a spouse or partner exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.
If your a Entrepreneur, Executive, or Professionally savvy Investor you will recognize and most likely appreciate I am taking the time to detail what exactly the definition of an Accredited Investor is. And it is a small population when compared to the United States Population as a whole.
A Qualified Client
This definition comes from my personal relationship with the good Partners and Attorneys of New York City’s International Law Firm Paul Weiss
A Qualified Client according to the SEC 2021 is a Client that has a 2.1 Million Dollar Net Worth Excluding their home.
- has at least $1.1 million in assets under management with the investment adviser immediately after entering into the advisory contract; or
- the investment adviser reasonably believes, immediately prior to entering into the contract, has a net worth of more than $2.2 million.
Please be sure to read the SEC up to date Investment Advisors Act of 1940
THE SEC UP TO DATE DOCUMENT CLICK HERE
Qualified Purchaser
What is a Qualified Purchaser? A Qualified Purchaser has a Five Million Dollar Net-Worth excluding their primary residence. QP could also be a Entity with Twenty Five Million in Assets and their primary business is not investing. It’s an actual separate company or entity.
Here is the Thomson Reuters Practical Law Definition in detail to keep things on the up and up and legit!
CLICK HERE FOR FULL DOCUMENT & EXPLANATION
Keep yourself moving through the roadblocks that deny you access
Are Entrepreneurs looking for Partners and Investors in all the wrong places?
In conclusion,
It feels like I should share the reality I faced as an Entrepreneur who had no financial reputation seeking influential mentors. I was literally meant to fail and go away to do whatever Entrepreneurs who fail go and do. But I didn’t fail. I kept going and being curious. Here is a quick story and reality I faced not knowing that everything I faced was rigged and stacked against me. If it wasn’t for my curiosity and my tenacious ability to withstand punishment and pain? I would have surely never discovered the next level in business finance and the strategy to get their. Please read on!
When I first became an Entrepreneur I had a suspicion that I should go seek out and talk to professional fund raisers. Most of these fund raisers viewed me as a waste of time and not worth a call back nor worthy of a personal meeting. They ignored me, disrespected me in the open. I took all this mistreatment on the chin. I in return did not play their dirty passive aggressive games. They reacted to my calls and visits as if I was a threat and unworthy of their valuable time.
But now these day’s I am not easily dismissed any longer! My market value has gone way up. All because I put in the personal work and received a real financial education. I have done all this by experimenting, researching, and having great teachers inside the Real Estate and Private Equity Fund space. These same Attorneys and Fund Raisers now openly ask me to collaborate on projects and campaigns with Investors. I have proven myself as a fierce competitor. The goal of today’s post, was to share with you. Even though you may feel you know everything about your business space? I promise you most likely should stay curious and stay insanely competitive.
Thank you for reading everyone. Id be happy to hear your thoughts below. Have a wonderful Holiday Weekend.
Godspeed -JS