7 Ways to Turn Off an Angel Investor (Elizabeth Kraus)
There are many reasons why angel investors do and don’t invest, but there is nothing more frustrating than watching a good company turn off an investor because of a stupid mistake. Here are just a few stupid mistakes to avoid when raising angel funding:
- Typos: So, I realize we live in a text message world and I often excuse typos in emails and casual correspondence, but not in a contract or important document. Especially if it’s a typo that spell check would catch!!!! (My husband actually refused to invest in an otherwise good deal because they had 3 typos in their term sheet.)
- Lack of Follow-Through: Investors want to see that you have the ability to follow through and execute, so if you promise things — even small things like sending an email — follow through! I can’t tell you how many entrepreneurs tell me they are going to send me their pitch deck “tomorrow” and then take three weeks to send it. Not a great first impression.
- Lack of Follow-Up: If an investor expresses interest in you and you don’t follow up within 48 hours, the investor might wonder how you are going to treat potential customers and other important inquiries. Everyone knows entrepreneurs are busy, but if raising money is your first priority, RESPOND.
- Inability to Set Expectations: Reasonable investors understand entrepreneurs are busy, but SET EXPECTATIONS. If you can’t respond to an investor question or deliver something right away, simply acknowledge the request and set a REALISTIC timeline for your response.
- A Know-it-all Attitude: No investor expects any entrepreneur to know everything, but they DO expect entrepreneurs to admit they don’t know everything. Understand your strengths and weaknesses, listen and respectfully respond to feedback, and don’t be afraid to admit when you don’t know something.
- An “Investors are Stupid” Attitude: As soon as an entrepreneur tells me that no investors have been interested because investors “just don’t get it”, it says one of three things to me: 1) The entrepreneur is too inexperienced to understand that there is no such thing as a “typical” investor, 2) The entrepreneur has no idea how to communicate the value of their opportunity or 3) The investors who have looked at the deal do in fact “get it” and it isn’t a good opportunity. Remember – I am an investor, so don’t bash investors, and I spend every day talking to investors, so don’t insult me by insinuating that you know so much more about investors than I do.
- Asking for NDA’s: Most experienced angel investors will refuse to sign NDA’s (here’s why). If you ask them to sign one, it can give the impression that you are not familiar with the funding process and haven’t done your homework.
It’s simple really — Pay attention to detail. Do what you say you are going to do. Be confident about your strengths, but admit your faults. And spell check!!!!!
Are there things that turn you off? Do you agree or disagree? Weigh in and leave a comment.
Elizabeth Kraus is a Boulder entrepreneur and angel investor and co-founder of the Impact Angel Group, a group of investors equally dedicated to making a difference and realizing a return.