What Price Advice?

Attracting Opposites

One of the potential investors was Richard Gwinn. Gwinn's company, Radnor, Pennsylvania-based The Abbotts Organization, has been buying, selling and investing in companies for more than 20 years. Gwinn's approach to early-stage investing is hands-on; he not only invests in companies but also offers strategic management services.

The other potential investor was a much larger competitor from Powell's home-building days. This investor had enjoyed substantial success but, in Powell's opinion, didn't have as much knowledge of or connections with the capital markets Powell felt would be critical to Cooperative Images' long-term success.

While Gwinn concedes that value-added investors are not right for every entrepreneur, in most cases, he says, they can play an important role in shaping a company's destiny. "The reason an early-stage company should seek a value-adding investor rather than simply a source of funds," says Gwinn, "is that management, financing, cash management and marketing hazards are absolutely critical to overcome, and an experienced value-adding investor, if he or she is the right one, will spot costly problems early on."

In the case of Cooperative Images, Gwinn brought big guns to the offering table in the form of other experts and professionals who would invest along with him. These included a former partner from a Big Six accounting firm, a corporate attorney, and a successful entrepreneur who had done well in the telemarketing industry.

The expertise in telemarketing was more than a little relevant since a good part of Cooperative Images' success relied on effective telemarketing operations. In Powell's mind, these investors possessed not only a deep well of related experience but also the contacts in investment banking that would help him attain his ultimate goal of setting up an initial public offering or selling the company.

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This article was originally published in the July 1997 print edition of Entrepreneur with the headline: What Price Advice?.

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