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Stepping into a meeting to pitch your business and make ‘the ask’ to an investor can be intimidating. You’re wondering what they’re thinking, what they may ask, and ultimately when they’ll say no. Luckily, GENIUS NY recently held a panel on Investor Relations with three top investors in the startup and UAS space to help give advice and answer some of these aching questions and concerns. Here’s what we learned:
1. Breakfast Meetings May Work Best.
It’s hard to get meetings with investors…you may think. But investors will make time to hear your pitch. Noa Simons, Executive Director of Upstate Capital Association of New York, makes sure she blocks out time in her week for startups. Chuck Stormon, cofounder of StartFast, says he rarely has meetings in the morning so breakfast meetings are actually the way to go!
2. Hearing Get Someone Else to Lead First is Not a No.
Get someone else to lead and we may be interested is a common phrase startups hear but what does that mean? Luckily, it’s not a no, and believe them. Rob Lindsay, a partner at UAM Advisors in NYC leads deals and says it’s easy to figure out who leads by going to Crunchbase. If their name comes first they lead. It’s not crazy to ask if they lead either. You’ll want to know this information before going into any meeting.
3. Have a Solid Management Team and Be Open to Shifting
Writing checks may be the easiest thing investors do but the hardest actually comes down to the management team. Noa says sometimes its obvious people are not in the right roles and its challenging. Investors look for patterns and really want quick ways to say no; one pattern is looking at the management team. Sometimes someone just wants to remain at the top and is not open to shifting. Chuck says it like this, do you want to be in control of nothing or willing to be a part of a team and be a part of something?
4. There Are Some Automatic No’s
Chuck actually had 23 automatic no’s…scary. We however were only told one and that was if the owners did not work their anymore. He said people quit and give up but there’s still equity which may even be 50% of the company. It’s hard to do deals when the people don’t even work there. The others said they did not have any automatic no’s unless it was outside their sector focus.
5. Some Deals Happen in Two Weeks and Some in Six Months.
Deals take time. Typically, it starts with a few calls, then an interview and then a term sheet meeting with a more detailed technical due diligence meeting. It can take three to six months. As Chuck says I can say no faster than I can say yes but if it comes down to it we can say yes and have everything done in a few weeks.
6. Have Manners Even When Rejected
Typically, investors accept one out of 100 deals. You will get rejections. But remember that manners still go a long way. Rob says don’t piss people off, be polite and have manners, that’s good business. Even if you get rejected send a thank you note, a handwritten one, an email whatever it takes. Both parties took the time to be there and everyone’s busy.
7. Investors Don’t Micromanage They Mentor
When you land a deal expect your investor to be a mentor…. always. Typically, investors only take a board seat depending on the round. Rob says his objective is to help his investments grow. If he can add value and not get in the way, then he’ll do that. Investors do not micromanage, if you meet one that does then run. They help make introductions and help think through larger, strategic blocks.
8. Investors Are People Too
Noa says meet us as equals. Investors will be with you for ten plus years, so you’ll want to get along with them. It’s a dating game on both sides, not one. So be yourself and don’t put on an act to get ahead because eventually they will see through it.
Final Words of Advice From Our Panelists
Have A Bottoms Up Forecast Not Top Down
“I’m a numbers guy so don’t tell me two trillion is big, I know that. I like to see a path towards financial profitability. I want to see that concrete thought has been put in. What’s the revenue and cost? I need the financial picture and paths.”
– Rob Lindsay, partner at UAM Advisors
Choose The Right Investor
“If you want to take on money, understand what investor is right for you. Be sure to research specific investors and look for if they lead, what deals they have done etc. Think of them as your customer. What are you selling them?”
– Noa Simons, Executive Director of Upstate Capital Association of New York
Act Like An Owner
“Always have an owners mindset. Things get misaligned when you don’t think like an owner and more like an employee. Keep interests aligned.”
– Chuck Stormon, cofounder of StartFast