Startup Fundraising: Pet Peeves
As a follow up to a request from a friend, here are a few that immediately come to mind:
Pre-Investment
- Insisting on meeting before sending a deck. I love meeting entrepreneurs, but often there are time constraints and it’s best if you don’t force a meeting without first establishing fit. Also, meetings are much more productive when we can dive into the materials ahead of time and come prepared.
- Sending a 50-page business plan before our meeting. While I want info ahead of time, I just don’t have enough time in the day to read a 50 page plan before every meeting. Realize time constraints – and the fact that most investors are illiterate – and send a short 10 slide deck instead. Plus, detailed business plans are mostly useless anyway.
- Not letting us keep the deck. Do you trust the investor you’re pitching? If not, don’t pitch them. I will not share your deck without your permission. You not letting me keep it hinders the due diligence and decision process I go through with my partners. I’ve seen this practice derail many a financing.
- Not knowing the focus/interests of our firm and partners before reaching out. Most VCs have a very specific focus. I won’t invest in a pet grooming franchise, so please don’t pitch me one. You can easily figure out what I care about by googling me, checking out my firm’s website, and taking a look at my AngelList profile.
- Asking me to sign an NDA. This has been covered many times. Don’t do it.
- Not being transparent about the syndicate. This is a controversial one that deserves more discussion, but not being open to sharing certain information is an easy way to start off our relationship on the wrong foot.
- Not giving investors enough time to do proper due diligence. I generally can’t and won’t make a decision in 24 hours. The best thing to do is to establish a relationship early, and give us advance notice of an approaching deadline.
- Not making the pitch/presentation a conversation. Most investors have a very short attention span (I was never good at paying attention in lectures). When you pitch an investor – formally or in an elevator –, pause after each slide or thought, and try to engage your audience. Don’t be afraid to let them hop in, and just be prepared to ask them if you can address a non sequitur question later on.
Post-Investment
- Not keeping investors looped. If you don’t send us updates on at least a monthly basis, we can’t help you, and you’re no longer on the top of our minds when we meet potential hires or strategic partners. A great example and writeup on this topic can be found here. You don’t have to spend more than 30 minutes a month on it, and it’s a highly worthwhile investment.
- Not sending materials well in advance of a (board) meeting. Board meetings can quickly shift from awesome to terrible – regardless of content – if you don’t prepare properly, and don’t get to the main points fast. I’m not yet an expert on this, but I’ve seen that the earlier you send materials the more prepared and engaged your investors can be.
- Not being super transparent about numbers. This happens rarely, but it’s surprisingly easy to fudge or float over key numbers and metrics when you want to avoid conflict. Take the high road and be transparent - it will help us better help you.
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Juventas Fugit is designed and written by Justin Wohlstadter, who, when not writing in the third person, can be found in a coffee shop talking about startups, thinking about the future of education, and generally procrastinating something important.
- Passions: startups that positively affect the world, education innovation, good design, learning, and meeting those with an equally insatiable curiosity.
- Play: director of product design at Enterproid and partner at BOLDstart Ventures.
- Previously: built the early-stage venture arm of Penny Black. And many other crazy, less successful ventures involving fire extinguishers, measuring philanthropic impact, and creative spaces.
- Pedantry: most of the important stuff I taught myself or learned from friends, but I’m fortunate to have (barely received) degrees from Harvard and Oxford. At Oxford I wrote my dissertation on how internet innovation will disrupt access to higher education.
- Procrastination: can be found on Twitter, Linkedin, AngelList and other web spaces, and be reached via email at my first name at this domain.
