Celebrities Don't Always Make the Best Start-up Investors

NEW YORK (TheStreet) -- Entrepreneurs sometimes think that the key to success is having celebrity investors that will help promote awareness through networking or a couple strategically placed tweets. While having an A-lister can provide some benefit, involving them in your start-up during the early days doesn't necessarily guarantee success and can even present some risk.

A single celebrity investment can bring in a wealth of attention for a company solely from that influencer's association. In addition to the free publicity, this process acts as a sort of endorsement for the company, giving it a level of credibility in both the eyes of consumers and other investors. The heightened visibility also naturally causes a boost in the startup's followers on social channels.

Yet, that visibility can be the worst thing for a start-up that isn't ready. The problem that often arises is that with a great deal of pubic attention comes interested consumers who expect to find products and services that work flawlessly and are ready to wow. Entrepreneurs need to remember that good public relations makes a bad product fail fast.

At FlashFunders, we see a lot of celebrities, athletes, and entrepreneurs that overvalue their publicity impact, tending to think that they're more effective than they really are. Granted, they can help to raise awareness quickly, but that doesn't matter if the product is no good. Just look at how Jay Z, arguably one of the most powerful influencers in the world, couldn't compensate for the disappointing Tidal, a premium music streaming service, even with a stage full of music celebs backing him up.

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