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Investors work hard to diligence investment candidates for two reasons 1) to understand the opportunity and 2) to uncover potential challenges. The latter consideration can be a challenging one for investors to do successfully if management elects to misrepresent the opportunity or is not forthcoming about aspects of their business.

Leaving surprises for investors to discover after they have invested is generally a bad decision for several reasons:

1. These surprises breed ill-will between the investors and management, damaging board dynamics.
2. These dynamics can leave management with less support for both their initiatives and on-going participation in the company.

To avoid these situations, you should be sure to share any aspect of your business that you think will surprise investors. Whether you make these disclosures over the course of your meetings with investors or all at once, be sure to do so before you take an investor’s money.