As an entrepreneur, you are either running/growing your business, or you are raising capital. Even the most talented entrepreneurs can’t do both simultaneously. There’s a great saying in entrepreneurship; fail fast. This is true not only of your business, but also when raising money.
So how do you know when it’s just time to move on and focus back on your company? Here are some tell tale signs you are barking up the wrong investor’s tree.
1. They don’t return phone calls/emails. Okay, obvious, but I had to throw this in there. Some entrepreneurs think being aggressive will help, and while its true sometimes, many times its not. Don’t forget, investors are social and they talk to each other. Piss off one of them, and you’re likely to give yourself a negative reputation without even realizing it.
2. They don’t follow up after the first or second meeting. If you’ve actively pursued the investor and they just don’t follow up, take the hint. If you want to keep him/her engaged, it’s best to start asking for advice here and drop the fundraising.
3. Let me introduce you to… While not a hard and fast rule, if an investor passes you off to someone else, this generally is a bad sign. The referral will ask the referrer why he/she didn’t invest, and the answer will be honest.
4. You are hearing the same objections over and over. I’m always amazed at how rarely entrepreneurs don’t hear the objections from an investor. Take all feedback seriously, incorporate the suggestions into your business, and then try again. Don’t just keep running your head into the wall.
5. Keep me updated. This has become a trendy phrase I hear lots of investors use to say “no thanks”.
