8 Steps to Make Investors Love You

This week's tip: the 8 steps to make investors love you.

When I was still an investor at Octopus Ventures, I spent a lot of time understanding the reasons for why I liked or disliked companies. I wanted to ensure that I was making unbiased decisions and not focusing on the wrong patterns. This in turn would hopefully make me a better investor in the future.

During my research, I realized something: the timing of our conversations and my perception of each founder played a significant role in whether I wanted to spend more time with them. If I wanted to spend more time with them, I was more likely to invest in their company. Therefore, the perception you give to an investor on you as a founder, as well as the timing of them play a large role in the success of a fundraise.

During this process, I also discovered that all the investors I spoke to (15+) felt and acted the same way. Why was this?

Fairly simple actually. It all comes down to human nature - remember, investors are humans too! We don’t have years of data to scroll back, nor do we know what the future entails. So the only thing we can go on is how you make us feel.

That is why storytelling is so powerful. It’s why warm connections are so important, and why building a proper operating system around your fundraise can make the difference between fundraising or not fundraising (you can see more info on how we can build yours together here!)

So how do you improve your perception when launching your fundraise?

There are many things you need to do, and while I can't teach you everything in this issue, I can teach you how to increase your perception through investor relations. Two of my clients have "raised in two weeks" using this exact step-by-step plan.

You will need to think long-term if you want to use this approach, but your future self will thank you for it. If you do it right, you will launch your fundraise with investors who already want to invest in your company, making it 10x faster and easier. This is what world-class founders do.

Here’s 8 steps on how you can create the necessary perception before you launch:

Step 1: Raise your previous round

You are at your strongest in an investor-founder relationship when you don't actually need them.

While most founders tend to go silent on investors once the fundraising is done (and I understand why, given all the stress!), it's actually the perfect time to start setting up your next fundraise.

Make sure to keep in touch with the investors you spoke to before. Maybe they turned you down, saying they needed more time. Maybe they gave you a term sheet, but you decided to go with someone else. Whatever happened, as long as the relationship is still strong and there's potential for them to lead your future round, reach out to them.

Step 2: Tell them you've closed the round

Once you inform an investor that you have successfully raised funds, it is an instant reputation boost as it demonstrates that people consider you trustworthy. You can earn bonus points if you can name some amazing investors who participated in this round, whether they are funds or angels.

Step 3: Tell the investor that you loved the conversation and would love to stay in contact

This is where most founders fail. As soon as the round is done, they disappear, only to resurface 1.5 years later for the next fundraising round.

When I was a VC and founders did this to me, I would scratch my head, wondering what I really thought of you the last time we spoke. I would scroll through my notes about you, giving myself half-hearted knowledge about what I thought of you. This almost always made my perception of you slightly more negative.

So, instead of disappearing after closing the round, try doing this:

1. Tell them specifically what you loved about your chats together
2. Tell them why you are excited by the company growing in the future
3. Ask them if they’d like to get a coffee or zoom call in a few months 

Step 4: Create a (bi-)monthly contact with the investor

This is how I would do this:

• Monthly investor update
• Quarterly coffee chat
• 6 month dinner (usually in a group with other founders and investors)
• Ad hoc conversations and help (both sides, but really focus on paying it forward to them!)

Your goal is to demonstrate to the investor, at every point of contact, how much progress you have made. Every time they meet with you, they should be impressed by the amount of growth you have achieved. This growth doesn't necessarily have to be in revenue, especially before Series A funding, but you must show them how much you are executing.

That is why I would say a quarterly coffee chat is the best option, along with ad hoc conversations in between.

Step 5: Hint that you may fundraise soon

When you are close to your fundraise (2-3 months away) subtly hint that you may fundraise soon.

If you have done this correctly you should have done three things:

1. Built a close relationship with the investor where they trust you
2. Shown the momentum and growth of your company (all about executing here!!)
3. Make the investor think they could pre-empt your fundraise and get in earlier than others

This will prompt investors to track you diligently, hoping to be at the forefront of conversations.

You see, investors love finding deals they believe are unknown to others. Your goal in the fundraise is to make the investor feel like they are the ones who are special. As if it was their deal flow, network and hard-work that has given them the leg-up to see your amazing opportunity early.

If you do this right, this will significantly boost your company's perception, especially if they've witnessed your ability to execute.

They'll want to focus all their time on ensuring you go through their process. Once you do this, a few investors will say something along these lines:

"I remember you saying you were going to fundraise soon, when do you think that will be?"

This is when you know you have made that investor already want to invest into you.

Step 6: Get that question from at least 2-3 investors

Always aim to have multiple investors interested in your company. This creates competition and momentum in your fundraising round.

It's important to avoid having just one fund talking to you. Remember, investors talk to each other. If you can get multiple investors interested in your company, you'll build momentum. Everyone will know that you're the hot startup everyone is tracking.

Step 7: Tell them you aren't fundraising yet, but will be soon

Here is the 5d chess magic that will completely change your fundraising ability: push them back (only slightly).

Inform the investors that you will not be fundraising until a specific date, as you are concentrating on a particular project in the business that will be “YOUR major inflection point, and a significant milestone before your fundraise” (you need to decide what that is).

Let them know you're enjoying the conversations you're having with them, and you'll be pleased to provide them with a one or two week head start.

Investors dislike being rejected, so you're playing hard to get while also showing that you're still executing.

They will lap this up and love you more for it.

Step 8: Start your process with 2+ investors already knowing they want to invest into you

You should now have at least two enthusiastic investors ready to start with you, which gives you an amazing opportunity to create the right process to build FOMO and momentum in your round.

In my last investment at Octopus (Quit Genius), I experienced this exact feeling. I had been following the founders for several years, and it became less a question of if we would invest, but rather when. All because they built that relationship and pushed and pulled me in the right ways.

Let me know what you think about these steps. Would you add any more? What step are you at right now?