If you’ve been keeping up with Shark Tank, you know that Daymond is not shy about jumping in on some pretty surprising investments, given his background. While he usually sticks closer to apparel, fashion and fitness-focused projects, when he sees something special in an entrepreneur who’s really put the work in and gone the extra mile to impress the Sharks, he goes for it.
But what is that “something special” that he’s looking for? The Sharks have had a lot of really charismatic entrepreneurs with fantastic ideas come on the show that Daymond passed on. Then there had been some that Daymonds gotten pretty riled up about. If you saw the episode where Ashley Drake pitched her Natural Grip hand wraps, you know Daymond was willing to get in an all-out bidding war with Robert Herjavec to get that investment.
Unfortunately, Ashley went with Robert and his “sporty shark” investment pitch over Daymond’s experience, expertise and connections in the apparel and fitness world.
That decision got me thinking, though. I felt like Ashley was making a big mistake choosing Robert over Daymond, but he didn’t manage to communicate well enough what he would bring to the table for her. And that got me thinking about how I choose business partners and the kind of advice I can give new entrepreneurs when they’re choosing an investor or partner…
COMPLEMENTARY SKILLS AND ASSETS
First of all, when I choose a business partner, I’m looking for someone I can work with, and I’m not just talking about somebody I can get along with. I’m talking about somebody with a skill set, with connections and other assets that complement mine.
So, as an investor, I look for an entrepreneur who’s working in a niche relevant to my interests, and someone who has the skills to really take advantage of my connections and expertise. As an entrepreneur, you should look for an investor who can offer more than just startup capital. You want someone who knows your field and can act as the missing piece of your business’ puzzle with advice, networking connections and more.
WILLINGNESS TO TAKE CALCULATED RISKS
Next, I look for a certain courage and willingness to take calculated risks. This one is a little tricky, because I’m not looking for a business partner who’ll run off and spend my investment capital on whatever they think will work next. I’m not looking for someone who’s about to let it all ride on a really shaky deal, but I also don’t want someone so cautious that they’re not willing to take any risks at all.
The perfect balance lies in someone who does the research, makes the calculations, determines acceptable risk levels and goes for it. This person knows where they can fail, and they have exit strategies to recoup losses, regroup and go at it again from a different angle.
GOOD LISTENING SKILLS AND A SOLID BACKBONE
Finally, I never go into business with someone who won’t listen to me, but I also never partner with someone who looks like they’re just going to do everything I tell them. I’m human, and sometimes my ideas aren’t the best options out there. If you have a solid backbone, and you’re willing to disagree with me and show me how your idea is a better approach than mine, then I’m going to be very interested in doing business with you.
Daymond learned the hard way (to the tune of about $20 million), a few years ago, that you can’t just choose a great concept and then throw money at your problems. That’s why he’s very careful and very deliberate about choosing his partners and investments. And you should be, too.