What does it take to convince investors?

Fundraising is as much of an art of persuasion as it is a metric driven game. Both sides are coming into an agreement where they need to feel that they are not on the losing end of the stick. A lot of times, this becomes a matter of the choice of words, and the convincing ability of the founding team. What are some of the reasons why investors choose to believe in some and not the others? This is an even bigger obstacle for first-time founders where their inexperience becomes another reason for the investors to hesitate. After talking to multiple stakeholders in the VC space, and my own experiences, I have put together three main ways to convince investors.

Maturity in the founding team

The founders need to display high levels of maturity during the conversations with investors and in any scenario. After all, imagine putting such a large amount of money into the hands of someone who does not display the capability of handling it. From the choice of words when pitching, to the attire worn and also the decisions made along the journey of the start-up. All of these are very important indicators of the maturity levels and the journey after investment is not going to be an easy one. It requires high levels of EQ and emotional agility to deal with the many diverse and never-ending conflicts that will emerge along the way. As an investor, it takes away a whole deal of worry and doubt when the founders carry themselves very professionally and maturely.

Honesty and straightforwardness

The second important point is to accept what you do not know and be willing to learn. Honesty is of utmost importance, do not oversell yourself to investors. It is an indication of the way founders operate, and if there is only overpromising and underdelivering, it gives rise to a lot of doubt. Founders who accept their shortcomings and things that they are unaware of, it gives room for them to seek advice and guidance from the resources around. It also gives assurance to the investors that this is a founder who can learn and grow, and not just stagnate at this self-established podium. There are three types of things: 1) Things that you know, 2) Things that you don’t know, 3) Things that you don’t know that you don’t know. Being honest and straightforward enables you to discover point 3 and attain higher levels of knowledge.

Structure and Detail

Going into great detail about everything is one of the key indications of a founder who is serious about the start-up. Firmly planning everything despite the volatility and uncertainty of what lies ahead is very important as it depicts the picture of ambition and foresight which is one of the key parameters that investors invest in. It is okay if the plan changes over time but having everything thought of and accounted for makes it easy for tweaks to be made as well. As an investor, it is very reassuring to know that everything is thought out and there is a structure behind most things in the start-up.

In a nutshell, convincing an investor is tough but possible even for new and inexperienced founders. It takes maturity, honesty, and structure to convince an investor to believe in you. Having the 3 pointers above may or may not suffice depending on the investor. At this stage it is an art of persuasion. All the best!

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