F*CKWITS: How To Tell If An Investor Will Fund Your Startup

Tim Jackson
Jul 26 · 9 min read
Crying newborn baby: metaphor for the undecided VC
Crying newborn baby: metaphor for the undecided VC
Don’t always assume that VCs are rational adults

A checklist for triaging out timewasters, some thoughts for what to do when they fail to qualify, and a useful fundraising aphorism

“I don’t understand what’s going on,” said Gunther. “I’m spending so much time talking to investors, I barely have any time left to run my company. I’m going to meetings, taking phone calls, rushing from one cafe to the next, and responding to dozens and dozens of email inquiries and requests for documents. Yet I don’t feel the fundraising is any further ahead than it was two months ago. They’re all still interested. But all they do is ask for more information. What a load of f*ckwits.”


Gunther is one of the CEOs I coach. He’s very bright, and his business is interesting and growing, though not as fast as he’d like. Once we started digging a little into his investor problem, it became clear that there were several things going wrong. None of the investors felt any sense of urgency, so nobody was in a hurry to move things forward. Gunther himself didn’t have a clear idea of what the process ought to look like. But the most important problem was that much of his time was being spent talking to investors who, frankly, weren’t going to close. And he didn’t have a good way of identifying who those investors were.

Most of his time was spent talking to investors who were never going to close

In selling to big companies, this is a known problem; there’s always a risk, if you’re not disciplined enough, that you can spend months or years talking to big corporations, hoping to sell your product but never quite getting a deal signed, and dying of starvation as you walk their corridors. That’s why there are established tools and checklists for ‘qualifying’ prospects in enterprise sales, so that you can identify early on the signs that the deal is unlikely to succeed, and spend your time on something else.

There’s clearly a need for a similar tool in venture capital, to help startup founders identify investors who have a reasonable probability of actually doing the deal. After talking to a number of CEOs, I’ve given some thought to this, and come up with a checklist.

First, a health warning: You’re unlikely to be able to fill out the answers to the checklist just by asking investors directly the first time you make contact with them. There’s a power dynamic there: investors often feel it’s their right to interrogate you about your business, but get sniffy if you start asking them questions. But a couple of gentle inquiries in an email, a bit of research into their portfolio, and another two or three questions in the smalltalk section of a first meeting can often help you figure out the answers fairly accurately. I’d suggest using the acronym FACKWITS:

  • Do they have Funding available? At any given moment, about one in eight VC firms have finished investing one fund and are in the process of raising the next one. An unknown number of private investors or family offices are waiting for a ‘liquidity event’ to produce money before they will be ready to make their next investment. It’s so obvious that it’s banal, but people who don’t have money right now, aren’t going to take part in your round if you want to close it in the next ninety days. If you’re delicate, you can probe for this.
  • Are they Actively investing? Even family offices and angel investors with plenty of cash on hand can spend time meeting companies just to learn about the industry or just to keep up to date. While they might invest if they come across something astounding, it’s not a good sign if they can’t tell you how many new investments they made in the past six months or how many they plan to make in the coming year.
  • Can they Commit Knowledgeably to the timeline? Everyone spends some time trying to understand your business before they come to a decision. For a PE firm, that might be 100 work hours; for a VC, more like ten; for an angel, maybe two or three; for a crowdfunding investor, the six minutes it takes to watch your video and fill out a form. Serious investors will need time to produce a term sheet, if they’re a VC, or to review someone else’s term sheet if they’re a follower, and then either read the final investment docs or find a lawyer to look at them. Someone who’s about to go on a two-month vacation, or who’s going through a divorce or starting a new job at the top of a bank, isn’t likely to have that time. If you try to hurry them along later in the process, they may then drop out, spreading FUD and wreaking havoc among the other investors. So you need to discuss in detail early on what their investment process is, what due diligence they’ll need to do, and how ready their lawyers are, so that they can commit to a timeline but be fully informed before they do so.
  • Where do they invest? Dumb question, obviously, but while some investors are truly global, and happy to wire money to people they’ve never met and receive updates only by email, others follow the principle of Arthur Rock, the VC who gave Intel its seed funding and also invested in Apple. A hundred years ago, when I was writing a book about Intel, Rock told me that he had a firm rule never to invest in a company more than forty minutes’ drive from his house in Silicon Valley. You can figure out which type any given investor is by looking at their portfolio. An investor who’s in scope on the other criteria but is geographically constrained may not reveal this, but they may therefore be an unlikely prospect for you. They may be taking the meeting because they’re considering an investment in one of your competitors closer to home.
  • Are you in the right Industry? At Walking Ventures, we like SAAS, platforms, marketplaces and tools. We don’t invest in hardware, e-commerce or gaming. To avoid wasting everyone’s time, we publish these choices on our website. Not all investors do the same; many who haven’t developed an investment thesis yet actually want to see lots of pitch decks and business plans in order to decide their strategy. If you receive a response from an investor who’s never backed a company in your space or remotely close to it, you may be contributing to their education rather than raising money.
  • Are you asking for the right Ticket? The ‘ticket’ is the amount that a VC invests — as in “We do tickets of $3–5m, in rounds of $5–10m” — and it’s important to be aware that no matter how much an investor likes you, professionals who are deploying money on behalf of institutions usually have a defined set of deal criteria. If your ask is outside their range, either way too small or way too high, the deal won’t happen. And talking to them is a waste of breath.
  • Is your company at the right Stage? This differs from ticket size, because the amount of money that makes them the lead investor in one round will make them at best a follower in the next. Many VCs are willing to do a smaller ticket one round earlier than their typical sweet spot in order to see how the company performs, so that they’ll have an advantage over other funds when it comes to the serious investment they hope to make. This means your business may still be at the right stage, even if it doesn’t superficially look like it. But if an investor typically wants to see $3m in ARR, and you’re at $500K, then your meeting with them isn’t likely to lead to money any time soon.

So that’s the checklist: FACKWITS. You can use it to qualify prospects, and to avoid wasting time trying to persuade people to invest in your business who aren’t going to.

Note that there’s a difference between being qualified and being interested. It may well be that the fund you’re talking to is absolutely ready and willing to make an investment in the space, but doesn’t rate you as CEO or doesn’t think your company has performed well enough. So passing the checklist is not be sufficient for a successful deal. But it’s necessary: when an investor fails, it’s best to move on to others.


Once he was equipped with the checklist, Gunther soon began to find he was regaining control over his time, since he was able to end the dialogue, politely, with a number of the investors. But what do you do if you take a meeting with an angel or VC, and you disqualify them ten minutes into the discussion? If you’ve crossed town to see them, it’s tempting to get annoyed and dismiss them as, well, fackwits. But that would be a mistake.

Remember that the startup world is an ecosystem, and that if you do helpful things for other people, those helpful things are likely to come back to you over the long term even if not over the short. So at the point you realise this guy is never going to give you money, switch gears: stop selling your business and try to figure out how you could make the meeting useful (and specifically useful for them). They’ll remember your generosity.

But you can also learn something useful from every person you meet, and investors are no exception. At the gear-change moment, try to say this to yourself: One of the many things this person knows is an insight that could be hugely valuable for me, but they don’t know which it is. It’s my job to find out.

Don’t forget that every meeting with an investor is free pitch practice. Observe which things you said seemed to pique their interest. Observe where they got bored. Note what seemed impressive or disappointing. Note which questions they asked. (It’s much easier to do this if two of you go, and one watches reactions while the other talks. Even if you’re resource-constrained as most startups are, it can be valuable to send a pair for the first few meetings.) Since you’ll make mistakes while practising, it’s much better to make those mistakes on investors where there was little chance of getting their money anyway than on your best prospects.

Finally, remember that you can ask investors for help, even (and sometimes especially) if they’re not going to invest. Who else should I speak to? What advice would you give me on the business? What mistakes do you think we could be making? What risks do we need to prepare more for? If you can resist the temptation to fill your allotted time with a selling pitch, you’ll have time to ask their advice on these things. There’s an old saying among startup founders:

If you want money, ask for advice; if you want advice, ask for money

The first half of this is the clever reverse-psychology piece: investors are so jaded by the hundreds of entrepreneurs they meet every year who are trying to get a share of the pile of loot they control that it’s refreshing (and flattering) to hear from a founder who seems to love them for their wisdom rather than their cheque-book. This is rare, and VCs sometimes find that it’s the best founders who do this, and they consequently offer to invest unprompted.

The second half of the aphorism is a point of clarity. When an investor refuses your request for funding, they’ll sometimes tell you why, and occasionally in detail. Write down their reasons carefully; they’re gold dust. Although many investors are individually wrong, the crowd is more often right. If you start hearing the same messages from lots of investors, it’s time to have a serious think about whether you might be wrong and they might be right, and if not then what information you could give them to convince them of your point of view. You can learn a lot about your company from why people don’t like it.


About me

I’m Tim, and these articles come from my work coaching Series A and B CEOs backed by VC firms in Europe, America and Asia. Since 2013, I’ve run a seed fund out of London that invests in SAAS, platforms, marketplaces and tools. I’ve backed 50 companies, sat on 19 boards, founded a startup, and taken it to an IPO on the NASDAQ. Before that, I worked for The Economist and the Financial Times and wrote business books.

About this publication

This is one in a series of blog posts covering nine of the most important skills I’ve seen in founders who successfully scale their companies. If you’d like to read more of them, please follow; if you’d like to review a copy of my forthcoming book, let me know in a comment or DM. And if you think you know a CEO who might find these ideas valuable, please give a few claps or share:)

Tim Jackson

Written by

Startup founder, former Economist and FT journalist, CEO coach, and seed VC at www.walking.vc

Lessons From CEOs

Tales from walks with Series A and B founders. By Tim Jackson, CEO coach and VC

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade