Meeting with a potential investor can be an exciting and potentially momentous moment for an entrepreneur. It allows them to see their businesses’ potential and shows them that other professionals are taking notice of what they do.
When a meeting goes well, it’s easy to get excited and lose focus on what’s important for your business. To that end, a panel of Forbes Business Council members shared some common mistakes entrepreneurs make after a meeting with a potential investor. They explained why these missteps might discourage an investor from moving forward, even if the meeting seemed promising.
1. Not Giving Investors A Timeline
A big part of fundraising is introducing a sense of urgency. Requiring investors to indicate interest by a specific time is crucial to keeping a fundraising process on track. Founders should be explicit as to when they need an indication of interest and precisely what the next steps are. - Dan Parsons, Thoughtful
2. Neglecting To Make Sure The Investor Is A Good Fit
One mistake entrepreneurs sometimes make is they get so excited by the potential of a check that they don't do their homework to make sure the investor is a good fit. Remember that this investor will be helping you run your company. Research their portfolio. Ask for references, and see how this investor has worked with those businesses. Make sure they have led deals before. Check to see what other resources they can offer you beyond money. - Shiloh Johnson, ComplYant
3. Not Managing Expectations
Simply put, most investors are predisposed toward being positive. Firstly, it's human nature–most people find it easier to be complimentary of your business rather than highlight all the flaws. Second, even if they choose not to invest at this time, they want to maintain a positive enough relationship, such that they might be afforded another bite at the apple. - Colin Darretta, Innovation Department
4. Failing To Form Valuable Relationships
Entrepreneurs often fail to create meaningful relationships that add value beyond the initial investment stage. Simply inviting a potential investor out to coffee to talk about 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. Asking Too Much of Investors
Entrepreneurs do not have a clear understanding of what they need from investors, and vice-versa. Often, they will ask for too much money or want too much control over its use, which can turn off potential investors. You must have realistic expectations when seeking investment capital and be able to articulate what you need clearly and concisely. - Chris Gerlach, Synergy Life Science
6. Not Following Up
Follow up within 24 hours (12 hours, if possible) with a genuine personalized thank you message and a recap of the meeting. Provide any follow-up documents that you have at the ready based on the meeting as well as any additional action items that account for the investor's feedback and could not be provided in the first outreach. - Deyman Doolittle, ShipSigma
7. Changing Your Business Plans For A Potential Investor
An investor is interested in your business because of how the business is operating at the moment. Pivoting your sales or marketing pitch, restructuring teams or making any decisions based on a potential investor is a mistake that can cost an entrepreneur in the long run. Stay your course. - Udi Dorner, SetSchedule
8. Not Asking Enough Questions
Don't be afraid to ask questions. This relationship will go 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 get in their investments. Make them sell themselves too. - Chase Flashman, ShipSigma
9. Celebrating Before An Agreement Is Reached
Many entrepreneurs get too excited about a potential opportunity and count the money before an agreement is officially reached. I have succumbed to this gaffe, and even now, I need to check my enthusiasm before a celebration begins. My recommendation is to follow up on encouraging meetings and move the process forward, but put the balloons on hold until the deal truly and legally closes. - David Lenihan, Tiber Health
10. Dismissing Business Risks With A Potential Investor
Investors want to balance potential risks with increasing value, and they are open to discussing how you plan to mitigate variables. Avoid the mistake of not bringing up this topic by instead providing investors with a real insight into you as an entrepreneur. - Marilisa Barbieri
11. Neglecting To Figure Out Next Steps
Doing nothing is a clear indicator that you don't understand where you stand. You should have actionable steps and specific actions that you can take to contribute to making that engagement even more productive. Right before shaking someone's hands, think to yourself, "Do I know exactly what are the steps moving forward?" 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 By Celebrating Prematurely
A promising meeting for an entrepreneur is simply another step to the next level of grind that entrepreneurs will need to face head-on. But unfortunately, many take the opportunity to celebrate rather than getting laser-focused with the positive energy to accomplish 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 true opportunity meeting? Does the firm bet the horse or the jockey? Don't lose sight of the fact that this is a sales presentation on how they make money. Be clear on what their objectives are and how you can help get them there. - Jeff Giagnocavo, Gardner's Mattress & More0
14. Settling For An Unfair Deal
It’s common for startups to settle on 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, VerifyMe, Inc.
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July 19, 2023