I work for Chargebee, the recurring billing and subscription management product used by thousands of customers in more than 53 countries and a proud GAN Partner. In my role, I head up one of our strategic initiatives, called “Chargebee for Entrepreneurs,” where we work with 100 accelerators and incubators to identify high-potential startups globally.
If you’ll remember, I recently wrote about how mentors can best guide founders in one-on-one sessions, and how those founders can best prepare for those sessions in order to take full advantage of their time with mentors. But what if you’re scheduled to sit down with an investor? Is preparation essentially the same? What are investors looking for?
The Difference Between Mentor and Investor Office Hours
A lot of startups might not realize this, but investor office hours are significantly different than office hours with a mentor. While mentors are there to guide you, giving encouragement, advice, and constructive strategies that help move you and your company forward, the purpose of an investor meeting is for you, a startup founder, to sell your vision in a way that demonstrates how that vision manifests itself in your company, your products, and the services you’re building with the ultimate aim of receiving financial buy-in.
Always Be Pitching
With investors, you must remember that, even in a seemingly casual meeting, you’re still pitching you and your company. That means you need to focus on segmenting your market, how you’re solving a problem, and any traction you’ve had on either of those two things. What is your unique view on your problem statement that allows you to succeed? In the early stages of your company, your team is also particularly important. Why are you the best person to solve the problem your company is executing on? How do you and your co-founder get along? What rhythms do you have to make sure you’re on the same page? Have you defined shared values?
Expect Feedback—Even if It’s Hard Feedback
Where mentors should consistently remain positive, refraining from judgment, investors typically have an opinion on your ideas that can be either (or both) positive and negative. They manage and invest money with the goal of tremendous returns. So, every entrepreneur they meet is a means of collecting data they’ll use to continue to test their investment hypothesis and add to their heat map of what sector/technology/industries are trending. They are in the business of saying “no” to almost all of the companies they encounter. Also, junior staff at venture firms may not have operational or entrepreneurship experience to provide guidance in the same way mentors might, given that mentors often have significant work experience. It’s not uncommon to hear a Partner at even a smaller fund review over 1,000 pitches a year, which averages out to almost four companies a day (weekends excluded).
Don’t Be Surprised if It’s Short
Mentors generally have the capacity to share in your successes and failures, where an investor may not. Casual meetings with mentors are also means of building a longer-term relationship potentially beyond the life of your startup. Don’t expect investors to stick around for the long-haul like this, especially beyond the life of your company. But, also don’t assume an investor doesn’t want to be involved. It’s always best to ask how they want to hear from you or how involved they want to be, so give them the chance to voice their interests. Just don’t be offended if it’s relatively low-touch or short-term.
How to Best Leverage Investor Office Hours
Search for the Investor’s Profile on Linkedin and Their Firm’s Website
Investors—especially angel investors and venture capitalists—are a people-driven business. They want to get to know you and you should try and do the same. Spending a few minutes to see where they went to school, their work history, and possibly any other signals you can glean from their biography will help you focus on your approach to make a connection. That connection can help make you a bit more memorable and stand out amongst other entrepreneurs.
If you have a bit more time, look at their online and social media presence. Investors are trying to market themselves and their firm, so being active on twitter, blog posts, articles, and podcasts are tools that they use to promote their ideas and subject matter expertise.
Understand Their Firm’s Investment Thesis and Stage of Investing
If you are trying to build the next greatest WiFI system, it’s probably not a good fit to an investor who focuses on biotech. It’s like the old adage, you wouldn’t want your auto mechanic to perform surgery to try and remove your appendix. Spend time looking at what the firm invests in, use Crunchbase to see their last couple of deals—these will give you indicators as to their investment thesis or focus area as well as the size of investments they are willing to do.
Use Investors for Validation
First, validate and verify things like the size of a category space, total addressable market, and your KPI and traction metrics to see if you are you are a good fit for financing. Investors are always looking at “comps” as a “yardstick” to measure what’s public, with what they know and what they read. Framing your company with their knowledge base of comps can be another source of validation.
Discover Who Your Competition Is
Odds are that when an investor meets you and hears your pitch, you might not be the first company to be solving your problem in the same space. While you might be aware of the bigger players you’re competing against, what about unknown, stealth competitors? Use your office hours as an opportunity to ask investors to name three other competitors are who might be in a similar space as you, but who might not be obvious. This also allows you to see if the investor understands your business and can help you reframe the problem from their own perspective.
Seek Hiring Connections
Investors can be incredibly helpful if you’re currently hiring for key positions. If you need a boost to your executive team, take advantage of investors’ large networks, either for consulting or full-time engagement.
And, a Bonus Tip: Deeper Discussion About How They Think
If you can prepare ahead of time, you could engage in a conversation about a recent article, podcast or blog post they made. You have a direct audience of one with the thought-leader—how many opportunities do you have for that? Sharing your ideas and showing how you think and applying those thoughts into your startup can generate resonance to make that connection for your subsequent meetings.