Key Don’ts for Startup Founders Seeking Investment

September 12, 2015

10:00 am

The more I think about my reasons for investing, I find it often comes down to my reasons for not investing. Many founders I meet, through one action or the other, set off one of my tics that makes me check out and pass on the opportunity. Earlier this year, Stephen McDermid of Andreessen Horowitz shared some common questions that investors from their firm hear from startup founders. It offered some good insight on investing, but missed on a chance to lay out some additional truths about what startup founders who are trying to raise funding shouldn’t do.

Here are some of the key don’ts for startup founders seeking investment:

1. Don’t Oversell

I love honesty. I want to dig into the problem with the founder and think about how to grow the company and build out the solution. If you’re overselling me, it means you see someone who needs to be persuaded to part with cash, not a partner for sharing ideas.

2. Don’t Project Desperation

Nervous founders seeking investment project desperation in so many different ways. If you are sweating profusely while explaining your business plan, try taking some self-help classes on projecting calm. If you are inclined to email investors daily for an update, stop yourself.

3. Don’t Be Unprepared

Before seeking any investors, have a full diligence file prepared with all possible information they might need: deck, bios, financials, product review, you name it. Be that cool customer.

4. Don’t Be Unfamiliar

It’s the biggest turnoff when I ask companies why they sought me out and I hear, “you’re an angel” or “we need capital.” Know who your strategic investors are, know how they can help you, and don’t be shy with asking them to deliver.

5. Don’t Lose Contact

It’s a happy medium: too often is desperation, but a three month drop off in communication is also the kiss of death. If you only call me when you’re hunting for capital, it’s not a fit.

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I am an entrepreneur, angel investor, and early-stage VC living and working in New York City.

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