“A house divided against itself cannot stand.” This is a well-known quote that many of you would know or have heard people quote, but it holds true not only for governments, but for organizations too. In the case of Investors, while potentially necessary, it can cause issues related to company control and wealth generated by the founder. In the worst-case scenario, it may even lead to the founder being pushed out of the company that they built.
There are many ways you can go about getting investors. One method for acquiring financial capital is through friends and family, but like Wasserman points out in his book, it is a dangerous path to walk, “If you go into business with money from friends and family, then you will either lose the business or lose your family and have a very good chance of losing both.” (Wasserman, 2012). In my personal experience, while it is nice that friends and family are willing to invest in your future it can have hidden expectations. Even when managing these expectations early in the best way possible, it can still unexpectedly cause friction. Besides, friends and family are not the only ways of acquiring money, you can reach out to other types of outside investors, which for good or ill can be more impactful to your business.
If you are capable of creating a business plan that is solid enough to attract more than your friends and family’s investment, then it is actually not as hard to acquire the necessary partnerships. Of course, I am excluding venture capitalists from this list given that they are the most difficult acquire, but they could have the best potential benefits in not just the financial side of the venture but in human and social capital.
Angel investors and Venture capitalists do allow you to add value to your business, but they each have their own downsides. This to me is the most interesting part of Investor dilemmas. No single solution will work and I think that speaks about the true nature of business. Sometimes there is no way to know for certain if your decisions will benefit you in the end. What is to stop a Venture Capitalist or an Angel Investor from using their boardroom power to hire key people loyal to the investor and not the founder? With a division against the CEO with only a little power it could be increasingly difficult to walk that tight rope. Worst case scenarios alone should not be enough to dissuade people from seeking these forms of investment, but it’s important to remember that many things in life are an exercise in risk management. One of the best-case scenarios of acquiring a Venture Capitalist or even an experienced Angel Investor may receive important guidance or support in making your company grow.
The best way to manage this risk is through gathering as much information as possible. When selecting your investors ask for references, check their accreditation, and research their public portfolio. (Witt, 2025) This will give you the information you need to make the best decision.
Ultimately, the investor dilemma is not simply about determining where an entrepreneur can obtain capital. It is deciding what the founder is willing to exchange for that capital. The right investor can provide money, experience, relationships, and opportunities that would otherwise take years to develop. The wrong investor can create conflict at exactly the moment when a growing company needs alignment. Entrepreneurs cannot eliminate that uncertainty, but careful due diligence can help ensure that they are choosing partners rather than merely accepting checks. Growth requires resources, but preserving the ability to lead that growth requires choosing carefully whose resources you accept.
References
Cote, C. (2022, February 17). How to Talk to Potential Investors: 5 Tips. Retrieved from Harvard Business School: https://online.hbs.edu/blog/post/talking-to-potential-investors
Wasserman, N. (2012). The Founder’s Dilemmas. Princeton: Princeton University Press.
Witt, M. (2025, December 17). What to look for in an angel investor. Retrieved from J. P. Morgan: https://www.jpmorgan.com/insights/business-planning/how-to-find-the-right-angel-investor-for-your-startup
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