10 Reasons YOU aren’t getting Funded!
Early stage funding is all about people. We like to say our investment decisions are 97% people, 2% markets & 1% product. While this is an exaggeration it’s directionally right, we invest in people first.
So why do investors rarely tell you that they are just not that into you? Because it's a tough conversation to have and we live in a politically correct world.
I’ll probably get in trouble for this one but here are 10 reason (in no particular order) we are not funding YOU!
1) The Sexy Founder
The founder who thinks entrepreneurism is sexy… the signs of this include:
- You arrive fashionably late in hipster chic attire. Your hair perfectly in place and are way to casual about everything.
- You run around the festival and conference circuit thinking that Burning Man, Coachellea and SXSW are going to help your startup. The likelihood they have a big impact is low, but you will continue to justify these with some lame excuse, like “I met so and so from unicorn company while doing sunrise yoga on the lawn”
- A quick look at your instagram feed will help to confirm our suspicions or alert us to The Sexy Founder
2) The Name Dropper
The bragger or the self promoting entrepreneur. You continuously promote yourself, how much you know, how awesome you are and you probably name drop a bit too much. You don’t let your team speak and if they do you constantly interrupt and take over for them during the conversation.
3) The Chatty Founder
You come in and just want to have a chat. We want a demo, a deck, charts, graphs, pictures and/or words. Make this stuff as tangible as possible for us. We don’t want to have a conversation with you (yet). We want you to razzle dazzle us with your pitch.
This seems to be cyclical. The pitches we saw in 2008 — 2011 were polished and strong (probably cause they were getting so many no’s) from 2012 — 2014 there were more ‘lets just chat’ meetings. These days the pitches are getting better as capital becomes harder to find.
4) The ABC Founder (Always Be Closing)
You are trying to sell us way to hard. Everything is always up and to the right until we dive into the numbers. Numbers seem to change in real time, you play fast and loose with everything. You use vanity metrics galore in your pitch. You don’t come off as trustworthy and ethical.
5) The Egotistical Founder
You don’t have passion for the idea… your goal is to build something for the money and notoriety it will create. You don’t have a real connection to what you are building. Without this passion it will be really hard to keep going when the times get tough — and they almost always do.
6) The Living on a Different Planet Founder
You are not self-aware of how hard this journey is going to be or what you are going to have to give up to have a chance to make it work. Being a founder is an incredibly tough, lonely, scary roller coaster ride (more to come on this in a future post). We’re not all ‘crushing it’ frankly most aren’t.
7) The Arrogant Founder
Feedback… who needs it? You’re the expert (see #5). By no means are investors always (ever) right and we want you to have conviction, but one of the reasons we give feedback and criticism is to see how you take it. We want someone who will listen, give thought, engage and ask questions and collaborate to figure out the best paths.
8) The You need me Founder — I don’t need you
You drill us before even telling us what your business is… You start off with questions like:
- What is your fund size?
- How much have you deployed?
- What value will you add to my company?
I think these are valuable questions. When they are done at the outset of the meeting they can rub investors the wrong way. Investors should end every call / meeting telling the founders about their fund, value they add, explaining the process and asking if the entrepreneur has any questions.
9) The round is closing Friday Founder
Bullshit. If the first date (call/meeting) goes well and we both wan’t to pursue a relationship it’s going to take some time to get to know each other. I’m sure doing a second close isn’t going to make a difference in the long run. This is a two-way street it’s just as important (if not more) for the founders to be comfortable with the inventor as it is for the investor to be comfortable with the founders. If your round is closing in a week you shouldn’t be talking to new investors still, the money should be circled, docs disrtibuted and closing a formality.
Pressure doesn’t seem to work well for investors either. So the tactic probably will backfire more often than not.
10) I hate this one and it’s not fair but it’s reality… We can’t understand you (language barriers). If we can’t easily communicate it’s going to be brutally hard to work together… further we’re always concerned about how this will impact your ability to sell the product and raise from other investors.
With all that said here is an interesting take on Why ‘Arrogant Jerks’ Become Rich And Successful In Silicon Valley