WHAT TURNS AN INVESTOR OFF by Pedro Ribeiro Santos from Armilar Venture Partners
The first 100% digital beerstorming was all about investors, and we had the opportunity to have Pedro Ribeiro Santos, partner at Armilar Venture Partners, telling us which signs they’re looking for and giving us some tips and - mostly - don’ts on how not to approach an investor.
Pedro divides these signs into 3 categories: process, content and people.
The first category regards to the actions taken by founders that could greatly harm their outcomes, such as:
Spamming their inbox
have you never ever?
Asking for an NDA before anything else
they need at least to know what you’re talking about, right?
Pitching like you're in Shark Tank
just don’t.
Throwing too much information on the first contact
one paragraph of what you're doing, which stage are you at? Complement with a couple of metrics (pilots/ revenue sales/ clients).
Unprofessional demeanours
typos, not acknowledging the source of the data, if it is reliable, proper presentation, right material, etc.
Lack of confidence in presenting (your own stuff)/lack of ownership
own your stuff!!!
Play on the investor's FOMO
the trigger is the investor to fall in love with the company, not the time.
Unaware / Insensitive of the investment process
investing is like getting married and it should take its due process.
Content is king, or is it? Are you aiming at the right target? Do your homework!
The obvious: investor inadequacy
render to Caesar the things that are Caesar's/ each fund has its focus/scope
A solution looking for a problem
always start with a problem - “this is what I'm solving and this how I'm solving it”
Inaccurate, un-sustained or exaggerated market size estimates
again, know your numbers/ be accurate, look for substance and don’t exaggerate.
"We have no competitors in this space"
it's normal to have competitors if it's an interesting market. Try and make a competitive matrix.
Hockey-stick financial projections in a vacuum
it has to be there but NEEDS to be done right.
Regulatory hurdle
Bad house-keeping
red flags such as pending contracts, weird cap tables or lawsuits.
Overpricing your business
Any startups biggest asset is its team. Make sure you hone the following topics:
Your CV
any hidden skeletons investors should know about?
Misleading, distorted or hidden information
because the truth will out!
No skin in the game
are you asking me to invest in your startup but you never did it?
The need-it-all
"I don't know how we get there - that's why I need you" - it's your idea and your product, of course we'll help but you need to know how.
vs.
The know-it-all
"I've got it. Leave it to me. All I need is your money" - investors also want to participate and contribute to the project.
Failing to recognize skill gaps in your team/lack of self-awareness
it is okay not have everyone capable of doing everything but the investor needs to know if you're aware of that.
Anything other than the realistic optimist
realistic, pragmatic, practical and aware of gaps and needs!