The difference between a Business Partner and an Investor

Friday, August 21, 2015 16:59
2 Business Partners

2 Business Partners – Bill Hewlett and Dave Packard

Company Partners provide access to both Business Partners and Investors so what is the difference and when would you have one but not the other?

Certainly an Investor is a business partner of sorts and can bring many of the benefits of a business partner. A Business Partner could in some circumstances end up investing in the business, so here is my take on the similarities and difference:

 

 

Business Partner

  • Hands-on
  • Brings additional, complementary skills
  • Sometimes useful contacts
  • Will share in the profits of the business
  • Likely to own some share of the business, or be given the opportunity to buy or earn shares
  • More commitment and “skin in the game” than just an employee
  • Primarily brought in for their expertise and ability to add value when working in the company

Investor

  • May be hands-on, but often not.
  •  Skill set frequently is in business planning, finance and strategic direction
  • Normally valuable contacts are available
  • Will share in the profits of the business
  • Injection of funds (to be used to grow the business) in exchange for equity in that business
  • Doesn’t want to run the company, but will expect involvement in major decisions and report on progress
  • Primarily brought in to provide funds, advice and contacts

If you need another pair of hands with essential expertise go for a Business Partner, if you primarily require funds and contacts, go for a Investor. Both will provide a sounding board and be able to provide advice.

 

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One Response to “The difference between a Business Partner and an Investor”

  1. David Johnston says:

    August 22nd, 2015 at 7:29 pm

    Good write up. Of course you can have in addition a business partner who is not part of your company at all, but perhaps another company who is partnering with you on certain opportunities.

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