The Investor Fantasy
This is an article for entrepreneurs looking to fundraise. You might be in the process or just starting out. Thought this might help.
How many times have you come away from an investor meeting and thought “Wow! This investor really understands what I’m building. I barely had to pitch and he/she was so excited for the opportunity! I can’t wait until he/she tells his/her partners on Monday morning and leads my round so we can start to build this together fast.” And then the perfect dream relationship manifests and builds from there.
This is the “Investor Fantasy”.
The ‘Investor Fantasy’ usually comes after several meetings with investors. On one certain day, it seems like you really click with an investor. The lunch or coffee meeting goes so well, you go home thinking that your round is closed and you can finally go back to focusing on the product. The investor fantasy usually kicks in when the entrepreneur is very tired of pitching, taking several meetings a day, weeks and months. It’s almost as if the entrepreneur starts to get delusional with all the energy and time spent meeting and sharing their startup story.
The Investor Fantasy sometimes spirals into a full belief that the investor will fill the round. The entrepreneur starts to remember the investor words they used in the meeting and begin to really believe they will sign and wire by Monday afternoon after they have their partner meeting. The entrepreneur can even start to picture them on your board and working with them through problems and figuring out ways to increase your revenue for the next round.
The good part about the Investor Fantasy is that it does bring back a short burst of hope to the entrepreneur who’s usually exhausted from pitching. It leaves them with the sense that at least one person really liked what they’re building. And understood the product and vision.
The bad part of the Investor Fantasy, is that a lot of entrepreneurs let go on fundraising since they feel like it’s nearly over. Entrepreneurs become less aggressive with meetings and emails and decrease the number of investors they meet with (also decreasing their chances of investment). Because they’ve been fantasizing in their head all the great and amazing things this new found investor will do for their company, they tend to slack off from finding other investors. This can be detrimental to the fundraising process. Because you can’t believe anything until the paperwork is signed and the money is wired.
So although it’s fun to fantasize about the investor and begin to make up stories in your head about how well the meeting went, you still have to keep going and meet more and more investors until the round is closed.
Dana Loberg is CEO and co-founder of Leo AR, the first augmented reality communications platform that gives anyone the power to enrich the world around them with realistic 3D and 4D animated objects and photogrammetry. Follow her @luckyloberg.