Five Reasons Investors Say “No”

To raise money, you will spend a lot of time preparing your company, explaining your deal, and making sincere friendships with investors and other people in the community. By expending this time and effort in fundraising, chances are you’ll be less frustrated by the process.

You can lose an investor in several ways: everything from simply being forgotten to sheer personal disdain between investor and founder. Here are some of the main categories:

  • You underwhelm them. If your team doesn’t seem capable of executing on the great idea that you set forth, you can permanently lose investor interest.

  • You confuse them. A confused mind says no. So make sure your pitch conveys what you want it to

  • You are a jerk. Arrogance simply turns people off. Yes, you have a great company, but you have to be a great person to work with, too.

  • You act cheesy. Don’t use overly flowery marketing language or make inflated claims to investors. They are wary of scams and people making the hard sell.

  • You fall off the investor’s radar. When an investor doesn’t hear your name or the name of your company for a few months, you are effectively out of the picture.

If you find that your fundraising endeavors aren’t going anywhere, take an honest look at how well positioned your company is; how effective your pitch is, both in terms of content and delivery; and how sincere you are in your relationships; and then make the necessary improvements.

Example: There was a company that had a great product, a strong track record, and an unpopular founder. His personality was brash, insolent, and off-putting. After years of very strong product development progress, he had not raised capital, and it was due to the fact that no investor wanted to work with him. He found a personable and perfectly seasoned CEO to take over the company and pitch to investors.

The best thing this founder did for his company was to step down to an internal, technical role (which he liked better anyway) and stay out of investor meetings. The company closed a funding round only a few months after the leadership transition.

  • Add a Comment
  • Print
  • Share
blog comments powered by Disqus
Advertisement

Inside Dummies.com