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Any tips for getting an investor across the finish line?

We are getting tantalizingly close with some investors that I really like. It’s taken a few months of courting and a lot of data analysis, but they told me today that they like me and really like the business that I’ve built. They want to do a little more analysis and research before they commit, which looks like it would be in the next couple of weeks.

We haven’t talked about the size of an equity stake, just the investment amount we need to more fully build things out before we go get some big-time capital.

This has been 100 percent bootstrapped to-date, and the help would be welcome. I’m giving up equity because that’s the only way it will really grow, I’m ready to get paid, and our small team is both drowning and underpaid.

What are some things we should do, or not do, to get a commitment?

  • Investors like to draw out negotiations and the due diligence period because the longer they wait to commit, the more desperate you will become for the money and they can make the investment with better terms for them.

    Don’t fall for their schemes. You have to put your foot down and tell them that you’re moving on with other investors(but don’t name the investors), and you’ll see that they will quickly call/email you to get a deal finalized.

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  • Either make them commit to a date or keep getting on the grind with other investors. You don’t have a yes until you have a yes. This is a common investor game.

    Reply

  • OK- by this post I am guessing this is your first time on the funding merry -go- round. First of all, stop talking to this investor. They are wasting your time.

    Do you want to know how to know if an investor is serious? They give you a termsheet. Everything else is just dicking around and they do this to massive amounts of start ups. Why??> BECAUSE THEY CAN

    They have nothing to lose and everything to gain by waiting, as you succeed they “de-risk” the investment and if you fail they have lost nothing.

    So go out there and hustle and get your BATNA

    Reply

  • OP here. Please let me clarify. This is not a VC-level deal, I’ve been through the meat grinder with those kinds of folks and we instead set our sights much smaller. This is an angel-level deal, a step to something much bigger that we see in the next 6-8 months.

    We’re profitable, and the investment would be great, but we can press on without them, it will just take longer. We’re not at the point of impatience or frustration with them, but if they are really interested, we’d like to get to yes faster.

    Does that change your thoughts at all?

    Reply

    • Angel investors tend to be more risk averse because they’re investing their personal money, whereas VCs are investing money that rich guys gave them; so they have less to lose.

      That’s why angel investors can drag their feet a lot. I’m the guy from the first response. Do what I suggested there and either they will invest or they will not. Either way, you get a definitive answer.

      There’s no reason why you should waste your time talking to investors who are not committing to you with a term sheet; they’re just distracting you from running your business and getting an investment from serious investors.

      Reply

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