This is naturally an ego-centric activity. Many, smart, hardworking, well-educated individuals will pursue you and try to convince you to give them money. It is easy to be a jerk… I’ve seen many investors that are dismissive, treat meetings with founders like speed dating, act overly critical toward founders and their decisions… and I don’t think this serves the startup or the investor well. When I first started, I recall grilling startups with a barrage of quick-fire questions and what I found is that the really strong opportunities weren’t returning my calls. While I thought I was being efficient, I just came off as a jerk and probably someone that they didn’t want to deal with for the next 5-10 years. Remember that investing in a company is very much like a marriage. You will go through ups and downs and know each other inside-out by the time your investment runs its course. You need to choose startups that you can weather the storm with and they will be choosing you as well. Often the good ones have a breadth of investors to choose from.
Below is the “Tip of the Week” transcript from the Podcast: Episode 3: Angel Investing 101 (feat. David S. Rose)
And, in general, investors develop a brand and reputation in their startup communities. If you are supportive, good to work with and helpful, even with the founders you don’t invest in… the word will get out and those folks will send more opportunities your way. Often one of the best ways and earliest ways to get involved with a startup is a reference from another startup. This can happen before the founders have even decided how much to raise or at what terms… which can be a great opportunity for the investor to get involved in structuring the deal and attracting others to it. And negotiation of terms tends to go much better when a founder likes you and thinks you’re not trying to screw them. My easiest and best deal terms came from situations where the founders and I had a very positive relationship. So, just like in business, be someone that others want to work with and everything else will work that much more smoothly.