6 Key Thoughts Along The Fundraising Journey (No2)
November 29, 2011 Leave a comment
Investor Criticism Now Can Lead To Investor Funding Later
“Feedback & Knock-Backs From Investors Are a Valuable ‘Proposition Testing’ Opportunity To Be Seized Upon.”
Some take feedback and criticism from investors well, others do not. I have seen many founders take offence at certain feedback suggestions or criticisms given to them from investors. They would do well though to remember that it is a kind and helpful investor who despite their busy workload, still chooses to give feedback and their thoughts as to why they do not want to look further or invest. This information or advice can almost be worth paying for because in the long run it could save time, effort and financial resources. More importantly, it comes from a source that is not motivated out of self-interest or a fee but only from a desire to try and teach or help. If you have such feedback then you should count yourself lucky and fortunate to have an investor who has taken the trouble to give you their thoughts and the benefit of their experience, even if their conclusion is not easy for you to take. Don’t snap back at them just because they take a different viewpoint on your business or industry than you do. Think about working with the feedback to see if some strategic changes may be necessary, or take their comments and try to find a way to de-risk your opportunity for the sake of any future investor conversation. For example, if the investor feedback says “the opportunity looks good but I am nervous because you have not grown a startup before, or have no track record in this sector.” Depending on the stage of your company, you may want to consider taking on a co-Founder, bringing in a mentor or a Non-Executive Director. Another comment might be “I would be happier if I could see some form of consumer, client or audience take-up as all you have at the moment is an idea in a business plan. It would be good to see that people actually want what you are proposing.” A follow-up conversation with the investor might say something like, “what monthly number of audience website downloads/sign-ups would provide the basis for our investment conversation to continue?” Or, “If I could get a letter of intent specifying the number or volume of their potential interest from the Head of Purchasing at ‘X’ (national retailer), would this form the basis of our ability to move forward with an investment dialogue?”
If you are fortunate to have put yourself in front of several angels but received a rejection at each turn, see if there are any common criticisms. If they are all saying similar things then you have good food for thought as to why you might not be getting funded. Remember, they have once been where you are now before they achieved their success. They deserve to be taken seriously.
The next 4 articles will follow soon.