AVOID Making These Mistakes With Your Investors
For those with startups where you're looking to raise investment, you've got to understand that an investor is someone you're building a relationship with. They need to trust that you can deliver returns, otherwise they have literally no reason to invest in you!
So of course, there will be some pitfalls that, because of their unique relationship to you, could really ruin your relationship and therefore impact your chance of success with them.
So we feel like taking these points on board is important, and want to draw particular focus to the last point on this list: treat your investors like partners. The best investors will be people who want to work with you, not just want a return. They'll want to give you their advice so that you can succeed, and may act as an advisor or mentor too.
And of course, the way you treat them may shift as a result of you seeing them as someone whose relationship you need to nurture, the way you'd need to nurture a business partnership. So you'll treat them a certain way too. And that shift will probably strengthen your relationship, how they treat you, what they invest in you or even how likely they are to invest.
Investors want to know they can trust you, because they're expecting a return. Put yourself in their shoes and finding/working with them might become that much easier!
Because an investor is more than just a source of funding—they’re a partner you’re building a relationship with — they need to trust you can deliver returns; otherwise, they have no reason to invest in you.
This trust is built over time, and there are some key mistakes that can quickly ruin your relationship with potential investors, impacting your chances of success.
Here are some critical points to keep in mind to avoid those pitfalls. Pay special attention to the last point: treat your investors like partners. The best investors want to work with you, offer advice, and may even act as mentors. Treat them as you would any valuable business partner—nurture that relationship, and you’re more likely to see them invest in you or support you down the line.
1. Learn the Rules Before Jumping In
The venture capital (VC) world has its own set of unwritten rules, norms, and expectations that have remained consistent for decades, even as the industry evolves. Understanding how VCs communicate, make decisions, and operate takes time and effort, but it’s essential.
Why It Matters: Building solid connections with investors is all about understanding their world. Rushing in without this knowledge often leads to mistakes that could have been easily avoided. Don’t be another one of those ‘experts’ trying to jump in without any relevant background—take the time to learn how the industry works first.
2. Nurture Your Contacts—Don’t Just Send a Pitch Deck to Anyone
Investor relationships start long before you need funding. Begin building these connections early, so when the time comes to raise money, you already have a network of potential investors who know and trust you.
Be Strategic: Don’t just email your pitch deck to any random investor. Instead, focus on cultivating genuine relationships. Find out who the right people are, what they’re interested in, and how you can engage them meaningfully.
3. Research Your Target Before Sending Anything
Don’t send out mass emails hoping for a bite. VCs receive hundreds of emails daily from entrepreneurs pitching their ideas. To stand out, you need to make sure you’re reaching out to the right person with the right information.
Do Your Homework: Study the VC’s website, portfolio, and blog posts. Use resources like Crunchbase to get a sense of their past investments and interests. Make sure your email is concise and contains essential information—an elevator pitch, key numbers, traction to date, and a clear call to action (CTA).
4. Understand What a Forwardable Email Is
If someone agrees to introduce you to a potential investor, appreciate it and spend time preparing a well-crafted email.
Respect Their Time: A forwardable email should be easy to share, contain all the necessary information, and make it simple for the person to introduce you. Don’t treat this as a formality; put in the effort to get it right.
5. Ask for Permission Before Making Introductions
Before introducing someone to a contact, make sure both parties are open to the connection. You might think it’s a great idea, but they might not.
Check First: This is basic business etiquette. A quick check can save you from awkward situations and preserve your professional reputation.
6. Master Basic Communication Principles
Good communication is vital, especially if you’re engaging with VCs for the first time or in a non-native language.
Learn the Basics: Familiarize yourself with common communication practices in the VC world. Understand how to address people, how to structure your emails, and what is considered polite or professional.
7. Know When to Use CC and BCC
Understanding when to include or exclude people from a conversation is essential in professional communication.
Don’t Mass Email Your Pitch Deck: Never send your pitch deck to multiple VCs using BCC. Instead, personalize each email, showing that you’ve put thought into why you’re reaching out to them specifically. When someone introduces you, be sure to acknowledge their effort and move them to BCC after the introduction.
8. Proofread Your Emails
Small mistakes in your emails can give a poor first impression. Use tools and software to spell-check and review your emails before sending them out.
Be Professional: Clear, mistake-free communication shows that you’re serious and detail-oriented. It can make a big difference in how you’re perceived.
9. Treat Investors as Partners
Your investors are more than just financial backers—they’re potential long-term partners who can offer advice, mentorship, and support.
Build a Partnership, Not a Transaction: Don’t use tactics like pressuring them with tight deadlines or ultimatums. Think of them as partners who are there to help you succeed, not just people who need to make a decision fast.
Final Thoughts: Building Strong Relationships Takes Time
As someone who's worked with hundreds of founders and investors, I’ve seen some crazy stories from all sides of the table. But healthy outcomes all boil down to this:
Building relationships with investors is a process that requires time, effort, and respect. Make sure you approach this with the right mindset and tools, and you’ll be better positioned to attract and retain the right investors for your startup…
And success WILL come your way.
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About Seven
Hey friends! I’m Seven - I write about challenges and opportunities affecting leaders across business. I release a weekly newsletter and a podcast, helping folks understand the leadership journeys and challenges out there, so we can better understand our purpose, place, and potential. The goal: to learn about what it means to be a leader, to support leaders, to find leaders, and to discover the leader within.
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