Don't Marry the First Investor You Meet

We were high-fiving and hugging each other as if we had just won the Super Bowl. Our management finally found investors for our regional magazine company, and we were on our way to journalistic infamy. None of us thought that taking their offer was one of the biggest professional mistakes we'd ever make.

When a group of ex-journalists and I started two monthly magazine publications in Philadelphia 12 years ago, we were desperate for funds in a city lacking seasoned regional investors.

Magazines are expensive to produce and we were at a disadvantage next to publishing companies that leveraged advertisers from other publications they owned.

Banks were out of the question because we didn't have much to pledge in terms of significant personal assets.

So when a group of well-known business leaders agreed to put up only half of the $1 million we needed, we jumped on the offer without thinking twice. Beggars can't be choosers, right?

No Angels

The investor sugar daddies came from financially driven manufacturing, technology and collectibles businesses, which should have sounded alarms were it not for the cash carrot they were waving.

Unfamiliar with the publishing world, they didn't understand that it typically takes three to six months to even obtain commitments from initial advertisers. As a result, they assumed we had padded our expense numbers when we asked for $1 million.