Ever wonder what you should or should not say during a meeting with a potential investor? Have you ever had an unpleasant meeting and wonder what went wrong? This is completely normal. And in today’s episode, Steli and Hiten will share what investors are expecting from you and how you can best prepare for those expectations. They provide valuable insights from both the investor side and founder’s side and discuss why both parties need to discern whether or not they’re a fit.
Time Stamped Show Notes:
- 00:05 – Today’s episode is about investor meeting dos and don’ts
- 00:40 – There are guidelines and best practices to follow when talking to investors
- 01:13 – Hiten says the first rule is: do not lie to investors
- 02:14 – Do not go into a meeting unless you have a plan of action regarding your problems
- 02:37 – Steli says to be yourself and do not impress investors by trying to be someone else
- 03:30 – You or your business is not going to be the right fit for every investor and that’s OK
- 04:35 – Some people want to say “yes” to everything an investor says, even though they do not feel it
- 05:10 – Investors are trying to evaluate you, your execution and your ability to grow your business in the future and you should not be afraid to say “no” to their suggestions
- 06:16 – Investors want to know if your business is worth investing in, if you can grow it and if you are the right team to do it
- 06:34 – Investors sometimes just want to ask things and instead of answering outright, ask more questions, too
- 07:17 – Steli says don’t just answer all the questions, make it a give or take
- 08:47 – Do not talk too much, give precise and in-depth answers but keep it brief
- 09:33 – If you ramble, investors might not want to invest in you because you do not know how to succinctly communicate
- 10:17 – You do not have to share every detail of your company—give your investor a chance to dig deeper if they want to
- 11:11 – Steli does not like when people ramble
- 12:27 – Hiten says to not do a group meeting with investors
- 13:31 – Hiten says meetings with one founder is good enough and he actually prefers to just meet one, especially during the first meeting
- 14:17 – Steli says if everyone is included in the investor meeting, then no one is doing the work
- 15:33 – Steli’s tip is to understand your goal in an investor meeting and to discover if you are a good fit
- 16:24 – Get to know the investor and pay attention to them to know if they are also a good fit for you
- 17:36 – Hiten’s tip is to gain context about an investor online, but don’t assume anything from just that information alone
- 18:22 – If you appreciate the podcast, give a review and rating on iTunes
- 19:16 – Send feedback about why you are listening to Steli and Hiten
- 19:41 – End of today’s episode
3 Key Points:
- Rule #1: Do not lie to your investors.
- Speak clearly, succinctly, and honestly—if you do not agree with their feedback, it is okay to disagree.
- You do not have to share every detail of your company to your investor; give them room to prod and ask you questions to dig deeper.
Steli: Boom. Hey, everybody. This is Steli Efti .
Hiten: And this is Hiten Shah.
Steli: And in today’s episode of the , we’re gonna talk about investor meeting do’s and don’t’s. So you meet with investors, this could be the first meeting, the second or the third, this could even be a call. I think that a call could also qualify as a meeting.
Steli: Whenever you interact with investors, you meet and talk to them, there’s guidelines, right? Maybe not hard rules, but guidelines on some mistakes you should avoid, many mistakes that a lot of founders have made and you and I have probably made ourselves, and good practices, best practices that will probably lead to desired outcomes and positive results. So we just wanted to share some of our experiences and tactics, things we’ve seen that founders do when they’re successful when they meet with investors, right?
Hiten: Yeah. I mean, the first one I’ll say is don’t lie to them. I’m just gonna go out there and I know you and I have talked about this, but just don’t lie to them. If you ask me what’s a lie, it’s something that your parents would not be happy with, maybe. I don’t know. I don’t know. Unless your parents are liars, too. I don’t know, but don’t lie. The last thing you want to do is lie to an investor. What you’re trying to do is build a relationship, and you’re not even trying. Your goal is to build a relationship. So don’t lie to them. Tell them the truth about where your business is at and where you think it’s going. Be honest. I’ve never seen an investor not have a lot of empathy and a lot of respect for founders that are super honest. And it doesn’t mean that you should be negative about your business. Never be negative, either. But be honest. This is where things are, here are the opportunities and/or problems in the business, and this is the stage we’re at, and here’s what we’re gonna do about those things. So it’s like, don’t go into an investor meeting if you’ve got some scars or some problems in your business and you don’t know what to do. That’s another don’t. So do not lie to them, and do not go into the meeting unless you have a plan of action around the problems in your business, that way when you don’t lie to them, you’ll be able to actually sound like you know what you’re talking about in terms of how you’re gonna actually solve these problems, or how you’re gonna learn how to solve these problems.
Steli: I love it. All right. So related to don’t lie is be yourself. It’s not the same thing though, but absolutely be yourself. I think one of the biggest mistakes I see founders make when they interact with investors is they are trying to be liked. They are so concerned to impress the investor, to be accepted by the investor, to impress upon the investor, that they are all about becoming somebody they are not in order to please or appease the investor. Nothing is a bigger turnoff, nothing is less sexy, than being fake or being inauthentic or being incongruent in your actions and your whole demeanor. Nothing is more attractive than somebody who is truly him or herself and is authentic. So just be yourself. You are not gonna be the right person for every investor. You’re not gonna be the right investment for every investor. You’re not even gonna be the right person. Some investors will just not like you. Some people don’t like you. Deal with it. Right? But be yourself, because if you’re fully yourself, the right investor will love you or will wanna work with you or will wanna bank and invest in your company, and all the wrong investors will move on and hopefully find something that is a good fit for them. If you’re not yourself, you’re gonna lose the ones that are right for you, and you might also lose the ones that are wrong for you; but even worse is you’re gonna attract the wrong people, because you weren’t yourself so you attracted somebody that never wanted to invest in who you are and what your company’s truly standing for. So absolutely, you need to learn to be okay with yourself, accept yourself, and be yourself when you meet with investors.
Hiten: Yeah. So many people try to be like somebody else, try to understand, “Oh, this is what I need to say,” or, “This is what I need to do,” but it’s not really them being themselves. One of the worst ways that I’ve seen this is that they almost wanna say yes to everything the investor says about their business, when they know it’s not true. And that goes back to not lying, right? If you don’t believe in a direction that some investor is saying, and it’s early or even later in your relationship, but you’re really trying to build a relationship with them, don’t just accept what they say. They’re just investors. They’re there to give you money. They might even be saying it to see what you say. Right? And I’m not saying they’re playing games with you. That just might be their style, to throw ideas out there. In fact, it is most of their styles to throw ideas out there and see how you react. They’re trying to evaluate you, your execution, your ability to grow your business in the future. So you should focus on basically what you believe about your business, what you know about your business, and help them understand that, even when they tell you some idea that you don’t agree with. There’s nothing wrong with saying, “Oh, I actually don’t think we should do that because of x, y, and z.” Or, “We’ve thought of that, but here are the considerations that prevent us from doing that,” or whatever it is. I think, you know what I find? I find that founders just forget that they just have a business; and the investor is just really looking to invest in great businesses. So if you’re able to represent your businesses great, honestly, and talk about how you’ve learned things and how you’re executing, and where the problems are in the business and what you’re gonna do about them, that’s the simplistic way, that’s the simplest way, to build that relationship with an investor. Because what they’re doing is they’re evaluating you as an investment. They’re looking at you and saying, “Is this a business I want to invest in? Is this a business I think is gonna grow? And is this the team that can do it?” That’s pretty much it.
Steli: Yeah, and I think being a yes man or a yes woman is just super unattractive. When you disagree, you might disagree, but even more basic is that sometimes investors will just bring up an idea, like, “Hey, do you guys think you could also add some AI to this or a bot to what you’re doing? I think that what you really need is some AI in this software,” or whatever the hell they say. And then instead of just going, “Yes, that’s a great idea. We already thought of it. We’re happy to do it,” even if you didn’t, or going instantly, “Hmm, no, we would never do this,” how about just being a little curious and just asking, “What do you mean when you say AI, and why do you think that will be good? How would you do it if you would do it? Hmm.” Just asking some follow-up questions when they make suggestions. It’s a give and take, and this will go to my next don’t, which is don’t just answer all their questions. Don’t make it a one-sided conversation where they ask questions for 60 minutes and you give answers for 60 minutes. Make it a give or take. You should also be curious about the investor. You should also have questions for them. “Hey, if you were in our shoes and you had this challenge, how would you solve it?” “Hey, if we ever run into this problem, how would you interact with us? How would you help us?” “Hey, we have these conflicting ideas around this topic. What do you think about …” You can also ask questions of the investor. This is a vetting process for both sides, and a lot of times, founders come in there and they think this is kind of like a casting session where the investor will ask all the question and dictate the direction of the entire conversation, and all you have to do as founders of the startup is to provide as much information as possible and then hopefully they’ll select you. You should also have questions for them. You should ask questions. You should clarify things. It should be a back and forth. A balanced conversation typically will lead into a balanced relationship, which is a healthy relationship. So don’t just answer, also ask questions, and try to be somewhat brief here. So please don’t give 30-minute answers to every question somebody asks. Give thorough, in-depth questions, but don’t just ramble on forever. This is another thing I see a lot of founders do.
Hiten: Yeah, me too.
Steli: Because they are so overly enthusiastic, because they are so nervous, because they wanna impress, they talk way too much. Way too much, and you can tell that the investor is checking out. They’re just, after five minutes of hearing a monologue of the founder, they’re just not paying attention anymore. Give good, precise, in-depth answers, but keep them fairly brief. If the investor wants to understand this even further, they can always ask follow-up questions and you can go deeper and deeper and deeper in depth and detail; but don’t talk for 15, 20 minutes sparked by one question. This is way too long. Please don’t ramble.
Hiten: Yeah, I agree. That’s a big don’t. I see that mistake all the time. You’re just so eager to share, and it’s like they don’t actually want to hear every single, little detail about that answer to their question. They just want to understand something, and part of it is just if you ramble, they’re most likely gonna be less likely to invest in you. It’s simply because you can’t succinctly communicate what you’re thinking. If you have to think of the questions that they’re gonna ask beforehand and have some nice, good answers that are based on your business, go for it. Whatever it takes to make it so you don’t ramble. I’ve seen so many great businesses just not get funding or have a very hard time just because the investor has to get through the rambling. They have to be able to deal with it. They have to be able to process everything you’re saying. Remember, they don’t know your business like you do. At the same time, that doesn’t give you any opening to go share every single detail of every single thing they ask. Instead, be succinct, and like Steli said, actually give them opportunities to dig in more if they want to. Don’t assume they want to know every detail. It’s probably like the number one thing, Steli. I don’t know in your experience, but founders just keep talking about that one answer to this one question as if they just need to keep talking about it and need to provide every detail.
Steli: Yeah. The worst thing about this is that a good amount of times, the rambling has very little percentage of true content in there. It’s just somebody using 11 sentences to say something that could’ve been said in one. This is one of my pet peeves. Nothing will shift my mood faster into a really bad mood than me asking one question and hearing somebody talk for five, six, seven minutes without giving me a clear answer. Nothing will make me more upset and put me in a instant bad mood than that. Honestly.
Hiten: Yeah, I love it. I love it.
Steli: That is the thing that drives me crazy. Right? And now, you have this whole thing of it’s impolite to interrupt somebody, but then again, it’s also impolite for people to monopolize the conversation and talk for fucking 30 minutes without saying anything. That’s also really shitty and very impolite. So now, you’re forcing me to interrupt you, and now I have to do all this work to get that little, simple nugget of information that I asked you 30 minutes ago. So that’s just a killer thing. I wanna ask you about something else when it comes to meeting with investors and don’t’s. It’s founder dynamics, right? So sometimes, you have one founder meet up with an investor. Many times, founders want all to meet with an investor, so you have two or three people. Maybe you have the two co-founders and one or two team members, so there’s like a group dynamic. What are some kind of do’s and don’t’s in terms of how you communicate with an investor as a group of people versus when you are alone?
Hiten: Don’t do it. Don’t do it. The simplest answer is pick the one person in your company that needs to go talk to investors, have them talk to investors. Once there’s actually interest from both sides, then have that person come to your office, or go introduce the person to your team, meet them at their office — whatever it may be, but wait. There’s no reason everyone needs to meet the investors in the first meeting, second meeting, or even third meeting, oftentimes. Ideally, it would be the person who’s the … Even if you don’t have titles, but the person who’s the CEO-type person, co-founder, or the business co-founder, to go meet with the investor. And it’s not to say that someone else should or shouldn’t, it’s just if you keep it to one person, then you can have a nice, meaningful one-on-one conversation, and the group dynamic doesn’t change anything. It’s like you get the buy-in from the investor that they’re interested in leaning into the deal or into your business before you actually go introduce them to other people in the company. Sometimes talking to both founders is not the worst as an investor, but even then, oftentimes one is good enough. But if there’s two co-founders, I can see that working out, but honestly, if there’s two co-founders and there’s any dynamics that are off, or an issue, then you guys have bigger problems. The team has bigger problems. Right? So I think two co-founders should be fine, ’cause you work together all the time anyways, it’s likely. But I prefer one usually, to be honest, especially in the first meeting. And this whole thing about bringing team members and all that, I’m not a fan; and it’s not because I’m trying to hide anything from the team, or I don’t want the team involved, it’s just like, we’re just talking to investors, and we’re trying to see if we like each other, and that can be really muddied up when you have a lot of judgment that the investor can do upfront without actually understanding the context of your folks and your team and your business.
Steli: And it’s not only that. Who’s gonna fucking do any work if everybody in the company goes to all the fucking investor meetings? Right?
Hiten: Oh, yeah. It’s like a red flag.
Steli: This drives me crazy. You need to push the company forward. There needs to be one person that’s truly responsible for fundraising, and people need to trust that person. Doesn’t mean, as you said, that in the later stages, the team can’t meet an investor, but it means that not every fucking first investor meeting is required to have everybody in the company participate, because nothing is gonna get done if that’s the case. Right? That drives me crazy. It’s one of those things, especially inexperienced teams, because inexperienced teams think that fundraising is something cool … Fundraising is not cooler than going to a bank and asking for a loan. Nobody’s volunteering to go to all the banks and sit there and fill out the loan application, but investor meetings, for whatever reason, seem to be like a cool fucking thing; so everybody in an inexperienced startup wants to go to the investor meeting because it seems prestigious. But it’s not, and it’s a waste of time, and you actually are slowing down the chances of success for your entire company if everyone goes to a meeting that only requires one person to go and attend to. So yeah, please don’t do it. I’m so glad that you said that. All right. I think I’m gonna round this episode up with my tip.
Hiten: Let’s do it.
Steli: And then we’ll go to have a tip from your side. My tip, two parts. One is understand your goal in an investor meeting. Your goal in an investor meeting is not to convince them to want to invest. I think that most people think that’s the goal, but I don’t believe that’s the goal. The goal in an investor meeting is to uncover and discover if there’s a mutual fit. Could they be the right investor for us, and are we the right investment for them? That’s what you’re trying to figure out. You’re not trying to get everybody to want to say, “Yes, I want to invest in you.” You’re falling into the tyranny of being selected, into that fallacy where you’re so concerned about getting the yes from them, that you’re not asking yourself if those people are the right ones for you, and if they’re gonna be a good investor or not. You need to take the investor meeting as an opportunity to get to know them. Yes, share who you are, allow them to get to know you as well, but you also need to get to know them. You need to pay attention when they talk. You need to pay attention what your gut is telling you about them. You need to pay and truly listen to what the advice that they give you. You need to also judge them, evaluate them, select or not select them. That’s also part of the job when you meet with them, and a lot of founders forget that. They think all they have to do is just sell, sell, sell, convince, convince, convince, and then if the investor says yes, you were successful; and they did not pay attention to the investor, and they cannot tell you who this person is, if this person will be the right partner for them or not, ’cause they completely missed the boat on that. So my number one tip is understand that when you meet with investors, it’s a two-way street. You also need to evaluate them. You need to judge them, and you need to either reject or accept them as somebody that you think should own a equity stake in your company and should have influence over the future of your business.
Hiten: Yeah. I got one. I agree with yours. The one I got is you can find out a lot about an investor online. Most investors have profiles. You know what they invested in. You should do that. You should get as much context as you can about the investors you’re meeting with just so that you understand them before even talking to them. So that’s my do. My don’t is don’t take that information and assume anything. Because what you do then is you start asking them about this business and that business, or this company and that company, or you think this company’s related to yours or whatever. You don’t know how the investor actually feels about the company, and you actually don’t really know how the company’s doing in most cases. So refrain from speaking too much as if you know everything about the investor. At the same time, learn everything you can about them.
Steli: I love it. All right. That’s it from us. Before we wrap this episode up, please do us a favor. Two things. One, if you appreciate the podcast and you like it, please go to iTunes, give us a review, give us a rating. Every five stars, every review, helps, grows the community, and makes all the time that Hiten and I put into this podcast just more valuable because it helps more founders in the founder community around the world hopefully succeed more. And then the second thing, just recently in an episode, we asked again for feedback, we talked about our reasons and our motivations why we do this podcast, and we asked you to share with us what you’ve gained from listening to the podcast, why you’re listening. We’ve got some amazing and some very touching and very personal emails, some people sharing the influence that this podcast had over their lives and their businesses, and there’s no bigger gift, no greater gift that you guys can make us. These emails are incredibly inspiring and motivational for both Hiten and I. So please, if you have feedback, if you wanna share why you’re listening, if we had any kind of impact, please send us an email. Steli@close.io Hnshaw@gmail.com. Send us an email, let us know, share it with us. We love to hear from you, we love to get feedback from you, so if you’re inspired and motivated to share that with us, it’s super, highly appreciated.
Hiten: Please do.
Steli: All right. That’s it from us. Bye-bye.