Or: ‘No’ doesn’t always mean ‘try harder’, sometimes ‘No’ really means ‘No’.
I’ve taken a little breather between an event I attended recently (and attended a couple more as a buffer) and the writing of this post so that I could sit back and objectively analyse what I saw (not to mention not directly identify the event).
[You might think that I’ve taken a BIG breather since my last blog post was in August. Of 2011. It’s not that I’ve had nothing to say in that time, but I’ve been very, very busy working with a few great companies and also running the inaugural semester of the Founder Institute in Israel.]
It was a small event attended by a few hundred people, most of them entrepreneurs, a few of them, a very few of them, angels.
You could tell who the angels were, they were the ones backed up into corners or against the wall, surrounded by arcs of founders, all trying to get their attention. There were some local personalities, but the event was also attended by some overseas angel investors – one of whom, at least, is quite well known – who quite clearly weren’t familiar with the local tradition of trying to crush the breath out of visitors.
I was interested in an introduction to Mr. Angel and I joined the crowd around him to gauge the dynamic of how he was handling the attention. In the meantime all kinds of people were coming up to him and doing their best (or not that great) versions of their “elevator pitch.” Others were waving their mobiles in front of him, trying to demo their product that the world just must have.
Some of the pitches were good, yet when he was able to counter with similar companies/products they couldn’t come up with a defensible position.
Other pitches weren’t so good (ahem…), he punched all kinds of holes in the product, market, or utility.
I saw only one person do it right. Perhaps it was because she was a woman in a highly male-dominated event that she stood out, but more because she had the right measure of assertiveness (vs. aggressiveness).
She came up to the gentleman, gave a perfect and practiced pitch (less than one minute) hitting on all the relevant points. He listened, asked a couple of intelligent questions (to which intelligent answers were provided). An exchange of business cards. End of interaction. Exactly as it should be done.
Even with this good example, others persisted in doing it “their way”. Not respecting personal space (i.e. right in his face), trying to demonstrate every single feature of their app, failing to know competition or market, asking for a valuation on the spot (that one got an incredulous stare).
But perhaps the worst example that evening came from a hopeful entrepreneur who gave a rambling 5 minute pitch and received a “no, we wouldn’t be interested” and then came back to do the same pitch again, except this time saying “maybe I will come see you in the Valley.”
At that point the angel answered “Why the hell would I meet you there? I’ve already told you no. Every day I get hundreds, and I mean hundreds, of referrals from people I know and trust.”
Folks, sometimes a “no” means “you’re not ready for us yet” but sometimes it means “no, period.”
As a public service, and also for my own self-interest of having more world-class investors visit us and not be scared away by our “bad rep”, here are a few tips for a first interaction with an angel or, for that matter, any investor.
Respect. Respect their personal space (and this includes your personal hygiene. Actually that’s a request from all of us). Listen to what they’re saying. Don’t argue, even if you disagree, but try to make a quick counter-point.
Don’t do the demo. It’s ok to show one screen of your app. It shows that you might actually be able to produce product, or at least fake a mock-up of one and know how to show a graphic on your screen (but say so). If the investor wants to test drive, let him.
Don’t get angry, don’t be pushy, don’t do a do-over. You would think this is an obvious one, but it’s not that obvious to some people. Your idea is great, your company will be amazing. Not everyone will understand that from 30 seconds with you, but it doesn’t mean they’re stupid.
Make eye contact. Smile. Put out your hand. Say your name. I watched people who did none of the above and who have utterly no chance of securing interest. This is not about money, this is about founding a relationship. Even if you skip the last three, do the first. And don’t skip the last three.
Know something about the other person. At the very least know what their investment portfolio looks like. If your company is similar to something they’ve already invested in, it’s probably not a good use of your time. If they don’t invest anywhere close to your sector it’s probably not a good use of your time. It’s highly doubtful that angels will be hedging their bets by investing in several competitors simultaneously.
Perfect the pitch. There are several different types of pitches for different occasions. Construct yours, review them and practice, practice, practice. Hire someone to help you, it’s worth the money (I’m happy to recommend some great people). If you think you can hack it, apply to the Founder Institute (it’s not called the Pitch Hotseat for nothing…). Even if you’re a pro at pitches, always have someone else listen to you and critique. THE ONLY THING you want to accomplish with your pitch is to get them interested in you and want to find out more.
Know your market. Be able to define your market well. “15 – 25 year olds” is not a demographic. Be versed in numbers, but don’t spout them off like you’re a talking calculator. Know the competition (and don’t deride them either).
Get out of the way. There are other people who deserve a shot as much as you do. Know when it’s a “no”. Most investors will tell you that in the first minute.