The startup world is very competitive for startup founders, and presents extreme financial risk for investors. It often doesn’t matter what stage a founder finds themselves in, the need for cash is absolute in the startup world – whether you’re in the super-popular tech space or opening a mom n’ pop store on the east side of a bustling city.
“Money makes the world go round”, the old saying goes.
If you find yourself in the glorious position of searching for investors to front-load a new venture, or are seeking funds to take your business to the next level, here are some things investors will almost never tell you, but you wish they would!
They don’t trust you or your shady pitch
If your experience with VCs is limited to the latest episodes of the Shark Tank, you might be inclined to think they’ll always tell you exactly what they think of you and your silly pitch. Angels can be even more fickle, as much of their investment-choosing model is based solely on their gut instincts – about you first and your business second.
Think they’re going to flat tell you this and shake you back into reality? Probably not…
Most investors will politely send you on your way, shaking your hand, and promising to “get back to you” after they’ve made a decision.
“Don’t call us, we’ll call you.”
If you don’t have a proven concept and/or your numbers don’t make sense, don’t bother lying about it – they’ll know and they’ll (eventually) pass on you and any other future ideas you might come to them with. Be honest and they just might too, and even if they pass this time, they might just be willing to give you a sitdown in the future.
They don’t like your team
Similar to the above, they don’t trust your team. Whether it’s a bad attitude or a feeling of incompetence; if they don’t like the team, they don’t like you by proxy. You can’t watch them (the team) 24 hours a day, nor should you have to.
So, it doesn’t really matter how prolific you are – investors will rarely say “Hey, I like you but your team has to go before I lay my money out on the line.” If they’re like most they’ll simply say:
“Don’t call us, we’ll call you.”
And you’ll be none the wiser, which is why it’s so critical to focus on building a strong team long before you set up that first investor round.
VCs and angels have to place a huge emphasis on the team you have watching your back, who essentially keep the wheels of the company turning round and round. If your team doesn’t inspire, or worse, turns them off for any number of reasons, you’re not going to get that funding you need.
To make things even more complicated, these firms and independents do talk amongst one another. If you think you’ll just walk out of one office and close a deal at the next one, you’d better hope that investor you just alienated with your crappily-chosen team doesn’t bring you up at their 5 o’clock dinner with their other investor buddies!
You’re not showing them any trust
A relatively savvy investor of any caliber can tell you’re keeping secrets from them. They know you can’t tell them everything, but if you’re treating them like some desperate idiot who is hell-bent on stealing your idea, they’re not going to be keen on doing business with you.
The fact is, you might be trying to impress them, demonstrating how good you are at keeping intellectual property under wraps. Or, you might be that guy who thinks they’ll take your billion dollar idea, then use their billions of available capital, and take that idea to market – sans you and your team.
Few investors worth dealing with have neither the time, nor the inclination to steal startup ideas. They’d rather piggy-back on a great idea and let you do most of the work while they make a somewhat passive income.
Stop being so full of yourself and answer their questions already!
They don’t see you as someone who can be mentored
In other words, you’re too full of yourself and show zero openness to their suggestions and/or opinions. You may have taken some risk up to this point, but they – should they choose to – will be taking on the majority of the financial risk moving forward.
This same reality holds true if you have CEOs, CFOs, and COOs who appear to be lacking in their ability to listen to the opinions of others. If you’re just looking for money and think you’ve got it all figured out, you better be able to convince them of that ability beyond a shadow of a doubt.
Even if you can do that, they’ll likely pass.
“Don’t call us, we’ll call you.”
It kinda goes along with another old saying “You can’t teach an old dog new tricks.” While it’s been proven you can, in fact, teach an old canine new tricks, VCs and angels aren’t willing to bet the farm they can turn you around. There’s too much on the line, and they know there will be enough big challenges that lay ahead, without pulling teeth on stubborn founder and their team.
Takeaway
Investors will rarely share these realities with you. Why should they? It’s up to you to show up on game day and know exactly what they are looking for. You’ve worked this hard already, and need the money.
Recognize that investors are more than just money machines, they want to join your team and need to trust you as much as they would their best friend in many respects.
Smarten up and get in the game already!
