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“We love you and your co-founder,but we want to meet the rest of the team." The speaker was a partner at an investment firm thinking about sinking money into the startup my co-founder and I ran.
"Specifically, we want to meet the engineers on board and understand how they think about the product,” the partner told us. And, without even thinking twice, my co-founder and I promptly set up the meeting for the next afternoon.
The meeting happened. The partner and his associate met with our entire engineering and product teams. We came out of the meeting in high spirits.
Which is why were shocked to find out the next day that the firm had decided not to invest in us. “We think you have a great thesis but the team is not really up to par to deliver on what the space needs,” the investment company partner told us. “We saw some serious deficiencies that would have to be filled later on, at significant cost. Let’s talk at the next round once you have de-risked the company more.”
What investors expect
Often, as part of due diligence, investors will ask for a variety of materials ranging from product plans and customer contracts to even user testimonials. And, as a founder, you can control how all of these materials are presented. But the one factor you cannot exercise complete control over is the most important one: human capital.
By interviewing your colleagues, employees and collaborators, investors often attempt to understand whether the team has the knowledge, willpower and grit to pursue the opportunity.
Often these team interviews and meetings fall short of investors’ expectations. Those individuals may believe that the team is not experienced enough to build out a complicated technical product and incapable of pivoting at the right moment to build the product the market needs. Additionally, investors may believe that the team just doesn’t “gel” or isn’t “all in” on the startup’s mission. These conclusions can come from things as simple as body language.
Want to prevent this from occurring at your startup? Here’s how to position your team a different way — the right way.
Let investors “fill in the blanks” as you describe your team to investors.
Envision this scenario: You are in an investor meeting and the discussion starts to move toward your team. As founder, rather than offer to have the investor meet your team in person, you take another tack: You offer detailed descriptions of their skills and capabilities that clearly communicate your excitement.
You accompany these descriptions with visualizations. Using your naturally infectious descriptions as a foundation, you prompt the investor to take what you’ve said about your team and “fill in the blanks” with details that his or her own experiences and imagination conjure.
This tactic is nothing new. In fact, you are borrowing a popular filmmaking strategy. Lacking funds to build a mechanical shark while making Jaws, director Steven Spielberg used music and creative camera angles to create the feeling of a carnivorous creature on the hunt. Knowing that the audience’s imagination would “fill in the blanks,” Spielberg purposely set up the film to be that much more terrifying — and successful.
In a similar way, if you describe your colleagues, especially those in technical roles, as extraordinarily talented and qualified, investors will “fill in the blanks” in their own minds and equate those colleagues to analogous rockstar people they’ve worked with in the past.
In this way, you will successfully convince investors what you knew of all along: that your team is qualified.
Pre-empt the ask: Bring your best colleague to the meeting.
Again, let’s go back to that investor meeting. It’s smooth sailing as the meeting progresses toward the end and the investor seems copacetic. Yet, something is amiss. The investor didn’t ask a single question about the team or its qualifications. Why? You’ve brought along one of your most valuable colleagues to participate and answer the investor’s questions.
In doing this, you are not alone. Many founders look to bring one colleague, usually a technical leader, who has a strong grasp of business fundamentals, can easily explain the solutions for complex technical challenges, and can convey a sense of commitment to the long-term success of the company. Remember, though: Bringing too many colleagues to the meeting could overpower the investor and make him or her feel ambushed. So, be judicious.
Know that, ultimately, it’s about getting to “yes” faster.
The above tactics are about enabling you to close your round with less “last-minute” questions that could derail the entire process. Because what really matters to the long-term success of your business is not investor and team introduction strategy but rather working with your team to create a great product that customers love.
April 9, 2019 at 11:13AM