Here is the truth: you are storytelling and “she with the better spreadsheet” wins.
If it’s your first startup, fundraising is a game and the best way to play it is by getting fans.
Investors will follow – and here’s the seven types of investors you’ll find on this journey:
1) First Timer
Their company was just sold, they got acquired by Zynga, or an aunt died. Whatever it is, they have entrepreneurial experience and some liquid cash. THEY WILL NOT INVEST IN YOU.
More questions will pop up. They will refrain from investing in you for “business reasons” and ask for more spreadsheets or decks. Stop – it’s not worth it. At the end of the day, they will write a check to their best friend – the one they love and always talked about partnering up with through college.
2) Don’t Know SEO
These are the “internet gurus” or Angels specializing in “Consumer Web” but will ask what SEO is. You work in Internet and if part of your business model or strategy involves SEO, then the meeting is potentially pointless. Explain what it is and find a way to cut the meeting short.
3) Mr Decks a-lot
This is the sneaky angel or associate that before anything else – even the promise of a call – needs plenty of materials. These are Deck Snatchers. They will try to see what information they can get from you and share with friends and startups they are going to invest in. I like to make a mini deck or a product deck for these types – or share public video clips. There’s a couple reasons why:
1.) it shows you are organized
2) explains your product without giving out too much information.
If they ask for a spreadsheet before a call, you are doomed. This is your business model – hold it closely.
4) Mr. Addressable Market
This is a casual topic that should come up after a relative amount of information has been shared. If you have gotten less than $500k in funding or are less than 2 years old, you are likely still testing different parts of the addressable market.
This is also a fancy term that investors learn in business school. Most entrepreneurs can do the math:
100 billion annual market = tons of opportunity = $$$$$. Addressable market = a lot.
5) Confused Connie
She can’t find the dial-in number, mixes up dates, responds to emails in multiple responses (before you have a chance to respond) and is overly worried about details that are not within your core business model.
This investor is the worst kind because they drive you nuts before they have even invested. Imagine if they write you a check? Best thing to do is build a friendship and see if they have leads or people within their network worthwhile.
Confused Connie will also confuse your team and group: it’s contagious.
6) Earthlink or Yahoo Email Address
It’s not a myth. If you are a internet startup using Yammer, Evernote, 99Designs, AppSumo, VIMEO, social networks and widgets, how are you going to explain your current status to an investor that hasn’t realized they can have a Gmail account which includes easy to use chatting?!
If they have a Yahoo, Hotmail, Earthlink, or AOL email address, walk away. See also Confused Connie.
7) I’m too Sexy for..
You know who these investors are. They like to be cool and invest in hot things but usually can’t get in on the super hot startups and want to make you think they are, indeed, in short supply.
They want to brag at cocktail parties about their “awesome startup” they own and unless you can keep their A.D.D in control, they will bug you quickly for an exit or PR mention or huge traction stone.
They don’t care about long term value – they’re in it for the valor. The interest of these investors is flattering and a very good sign, but pick someone who gets what you are doing and sees the dream and passion – not the TechCrunch headline.