Meeting a potential investor can be an exciting and potentially memorable moment for an entrepreneur. It allows them to see the potential of their business and shows them that other professionals are aware of what they are doing.
When a meeting goes well, it’s easy to get excited and lose focus on what’s important to your business. To this end, a panel of https://cafe-madrid.com/ Business Council members shared some common mistakes entrepreneurs make after meeting a potential investor. They explained why these missteps can discourage an investor from moving forward, even if the meeting looked promising.
1. Not giving investors a timeline
A big part of fundraising is introducing a sense of urgency. It is critical to require investors to show interest at a specific time in order to keep a fundraising process on track. Founders must explicitly state when they need an indication of interest and what exactly the next steps are. – Dan Parsons, Thoughtful
2. Neglect to make sure the investor is a good fit
One mistake entrepreneurs sometimes make is getting so excited about the potential of a check that they don’t do their homework to make sure the investor is a good fit. Remember, this investor will help you run your business. Examine their portfolio. Ask for references and see how this investor has worked with those companies. Make sure they have led deals before. Check to see what other resources they can offer you besides money. – Shiloh Johnson, CompliYant
3. Not managing expectations
Simply put, most investors tend to be positive. First, it’s human nature: most people find it easier to compliment your company rather than highlighting all its shortcomings. Second, even if they choose not to invest right now, they want to maintain a relationship that is positive enough that they might get another bite of the apple. – Colin Darretta, Innovation department
4. Not being able to form valuable relationships
Entrepreneurs often fail to create meaningful relationships that add value after the initial investment phase. Simply inviting a potential investor over for a cup of coffee to discuss ideas and shared beliefs can help nurture and pave the way for a relationship that has the potential to provide value in the form of investment, mentorship, leadership, and network growth within the industry. – Tomer Hen, Mobco Media
5. Too many questions from investors
Entrepreneurs don’t have a clear idea of what they need from investors, and vice versa. Often they charge too much money or want too much control over its use, which can deter potential investors. You must have realistic expectations when seeking investment capital and be able to articulate clearly and concisely what you need. – Chris Gerlach, Synergy Life Science
6. Not following up
Follow up within 24 hours (12 hours, if possible) with a heartfelt personal thank you message and meeting summary. Provide any follow-up documents you have on hand based on the meeting, as well as any additional action items explaining the investor’s feedback that could not be provided in the initial outreach. – Deyman Doolittle, ShipSigma
7. Changing Your Business Plans for a Potential Investor
An investor is interested in your business because of the way the business currently operates. Spinning your sales or marketing pitch, restructuring teams, or making decisions based on a potential investor is a mistake that can cost an entrepreneur in the long run. Stay on track. – Udi Dorner, Set schedule
8. Not Asking Enough Questions
Don’t be afraid to ask questions. This relationship goes both ways, so you want to know that they are as invested in this as you are. Ask to be connected to a founder from one of their other investments. Ask them how involved they typically are in their investments. Let them sell themselves too. – Chase Flashman, ShipSigma
9. Celebrate before an agreement is reached
Many entrepreneurs get too excited about a potential opportunity and count the money before an official deal is reached. I have succumbed to this gaffe, and even now I have to contain my enthusiasm before a party begins. My recommendation is to follow up on encouraging meetings and move the process forward, but put the balloons on hold until the deal is really and legally closed. – David Lenihan, Tiber Health
10. Rejecting Business Risks from a Potential Investor
Investors want to weigh potential risks against increasing value, and are open to discussing how to mitigate variables. Avoid the mistake of not bringing up this topic by giving investors a real insight into you as an entrepreneur instead. – Marilisa Barbieric
11. Neglecting to figure out the next steps
Doing nothing is a clear indicator that you don’t understand where you stand. You need to have actionable steps and specific actions you can take to make that engagement even more productive. Before you shake someone’s hand, think to yourself, “Do I know exactly what the steps forward are?” If the answer is no, don’t shake that hand and say, “One more thing.” – Jean Paul De Silva Clauwaert, Web Content Development
12. Losing sight of celebrating prematurely
An auspicious encounter for an entrepreneur is simply another step to the next level of grind entrepreneurs must face. But unfortunately, many take the opportunity to celebrate instead of focusing on the positive energy to take the next step. – Matthew Davis, GDI Insurance Agency, Inc.
13. Leaving without understanding who the decision makers are
Don’t leave without a clear understanding of who the decision makers are. Was the meeting a fact-finding mission for the investor or was it a real casual meeting? Does the company bet the horse or the jockey? Keep in mind that this is a sales presentation about how they make money. Be clear about what their goals are and how you can help get them there. – Jeff Giagnocavo, Gardner’s mattress & more0
14. Deal with an unfair deal
It’s common for startups to settle for the first investor or deal that comes their way without thoroughly researching their options. Never agree to terms that don’t feel right or that you think are unfair because you haven’t found the right investor yet. – Keith Goldstein, Verify Me, Inc.