How to Determine if an Investor is Interested
Chapter Six Excerpt: Startup Muse available from Amazon
Before I raised my first dollar of venture capital I had given almost a hundred pitches on Sand Hill Road, Sherry Lane, and Broadway. Clearly, I wasn’t very skilled at the art of raising money, but I was paying attention and learning a lot. Since then I’ve pitched hundreds of venture capital partners raising millions of dollars over the years. One thing I’ve learned is that an entrepreneur’s time is finite and as a result determining which investors to spend time with is very important. There is one surefire way to determine if an investor is not interested in your deal — he lets you finish your presentation without interruption.
In fact, an investor’s interest level is inversely proportional to the amount of time he goes without interrupting you. If you make it through until the end of your presentation don’t waste another minute with them. I recall being offended and unnerved whenever it happened, but eventually, I figured it out that I was completely misreading the situation. The more an investor digs in the more interested he is. Don’t get offended, instead, design your pitch in such a way that you get the MOST important information out in first 2– 3 minutes. Your goal should be to be interrupted and taken off track within the first five minutes.
Most entrepreneurs spend too much time working on their presentations — if you’re doing it right no one will ever get through it — so quit wasting your time. If you are spending 75% of your allotted time giving the investor a class on your market and product you’re doing it all wrong. You sell your customers on your product, not your investors. Explain the deal first. Get the investor excited about it before asking them to take your “class”. If you’re lucky the investor will drive the conversation once he understands your deal. The more the investor pokes and prods the better. The more an investor questions your assumptions the better. The more uncomfortable you feel the better. These are all great signals and signs that you should invest more time with the investor.