Are all investors just plain rude, self centred & gits? Wednesday, December 06, 2006
Mark Suster of Koral recounts his experience of a VC meeting which presents a pretty dire picture of investors (of which I am one).
So let's consider the scenario, rather than Mark's specific experience.
Funding meetings are always challenging, but in some ways they are no different from any "sales" meeting. The "seller", in this case the entrepreneur, often wants to tell their story a certain way - they've rehearsed it, believe they know what the investor wants to hear, and are sure that it will be an interesting story likely to captivate the listener.
However, the buyer (investor) has things that turn them on; angles they want to consider; needs they want met. And sometimes, the seller just isn't hitting the mark.
Now, let's start with the premise that an investor isn't intent on wasting their time - pointless meetings designed to pass the day or into ritual humiliation sessions etc. So generally they are hoping that the entrepreneur is going to bring them a fabulous opportunity to get seriously rich(er).
It's certainly a possibility that the investor may be kissing lots of frogs to find the "Prince" and hence determine early in the meeting that this opportunity isn't for them (we'll go with the notion that there is actually an opportunity rather than a stupid idea - you'd be amazed what rubbish is sometimes pitched!). Then it certainly can be 50 minutes of hell for both sides unless you want to cut the entrepreneur off at the legs and cut short the meeting - doesn't normally happen.
In Mark's example, it certainly can be the case that not all the assembled audience want to be there - again, lots of sales meetings can be like this.
As an entrepreneur you should watch for the same signals as you would in a customer meeting and there's no harm in regularly testing the waters during the meeting - "are we covering all the relevant areas for you? Does our offering appear to fit your sector profile? Have you seen similar offerings and what were your thoughts on them?". I know these are closed questions but the gist is engage your audience and continue to affirm there is a connection. If there isn't, then close the meeting after checking that your audience is happy to stop.
Someone suggested to me that the funding process is a little bit like dating. Don't expect everyone you meet to be your ideal partner or you theirs. First dates can be a disaster
because you're unsuited but equally for many other reasons. Don't take this to mean you are a necessarily a bad proposition - just bad for this particular investor.
In contrast, sometimes the investor will be keener on you than you are on them!
Ultimately, and to stretch the analogy to its ultimate limit, teaming up with an investor is like getting married, except in this case there will always be a prenuptial (shareholder) agreement. Post the ceremony you may have great times, laughs, sadness, disappointment and fights. But you are entering into a relationship, make no mistake.
And if you get "hurt" on the first date, it doesn't mean all "men" are gits. Just some.
posted by John Wilson @ 9:04 PM Permanent Link
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