Reward v. Risk - Advantages and Disadvantages of Courting Strategic Investors.


Venture-backed companies often have the opportunity to accept an investment from a strategic investor. These opportunities typically come in later financing rounds after the company already has one or more venture capital (i.e., financial) investors. There are distinct issues that should be considered when deciding whether to accept such an investment.

Potential Benefits -

Market/industry credibility. An investment by a successful and well-respected player in a company’s industry is a sign to the market that an investor who really understands the industry believes in the firm’s business model and/or technology.

Originally published in Seattle Business magazine on May 22, 2014.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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