Written By: Kelly Bryant
How many times have you left a VC meeting feeling like you crushed it only to receive radio silence afterwards? Sadly, you’re not alone. Many of the startup founders I speak with land in this strange limbo period where they have no clue whether an investor is seriously interested or just going through the polite motions. (Spoiler alert: if you have to wonder whether or not a firm is interested, they’re just not that into you).
To avoid that awkward unknowing, I’ve outlined three green lights that should signal to you an investor is actually calling you back.
1) They ask the hard questions
Remember, a VC’s job is to find every skeleton in your startup’s closet. Many times, if an investor has already decided to pass, they won’t even bother asking the difficult questions because they’ve already found too many red flags. I realize this is a little counterintuitive as you may assume that numerous prodding questions is a bad sign. On the contrary, if a VC is engaged in your pitch and diving into the nuances of your business model and go-to-market strategy, they are doing their job and are interested in the opportunity.
2) They want to know who else you’re dating
This is a tricky one. If interested, many VCs will be curious about what other firms you’ve been taking meetings with and how serious the opportunity is to you. The key here is to be honest, but express genuine interest in the person across the screen. For example, you could answer by saying, “As I’m sure you can expect, we are doing our due diligence and meeting with firms that we feel can help take our business to the next level. That said, we are very interested in your firm because of x, y and z.” Although this can be a little awkward, the good news is that if an investor wants to know your fundraising progress-to-date, they are likely curious about moving you forward in their firm’s process.
3) They plan the second date during the first
If an investor is truly interested in you and your business, they will be actively planning follow up calls and next steps in the due diligence process. One of the most interesting trends we witnessed as a result of the pandemic is how quickly investors are now willing and able to close deals. It doesn’t necessarily take months of face to face meetings and office visits to get a term sheet (although it still can). Due to the insane competition between firms, VCs now have business development teams whose mission is to find the next unicorn before their counterpart. All of that said, if a VC is keen on investing, they will be eager to know your fundraising timeline, proactively scheduling meetings and expressing interest.
Hopefully these tips help you pick up on subtle clues the next time you sit down with an investor. Bear in mind, if he or she isn’t interested, don’t take it personally. You’re likely engaging in a 5-7 year relationship and it’s important to have real chemistry with whomever invests in your company. If all else fails, remember these wise words from Justin Long.
