There was an interesting article on Forbes.com from Martin Zwilling last week regarding the types of angel investors entrepreneurs should avoid. His list includes control freaks, has-beens, and numb skulls to name a few.
The article got me thinking around this idea of "bad money" from angels, or even investors in general. Is there such a thing as bad money? -- no question. There has been and always will be predatory investors motivated by greed, malice, and self-interest. These are the investors that companies should be avoiding at all costs. The question entrepreneurs need to be asking themselves is "Where do I draw line?".
When money is tight and desperation to keep a dream alive sets in, I'd argue that any idea of bad money flies right out the window, which I don't necessarily believe is a bad thing. There are different levels of "bad" investors, many of which entrepreneurs, the Kings of Perseverance, should be able to overcome. If an angel investor becomes a nuisance, entrepreneurs should focus on growing their business to a point where they can pick and choose their investors, pushing any bad money further and further down the cap table.
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