What’s the Biggest Mistake Entrepreneurs Make When Pitching for Seed Funding?

seed funding mistakes

Seed funding isn’t easy to come by, especially when most founders handicap themselves from the get-go.

Despite the wealth of knowledge online and platforms like Angel List and Gust, I hear that founders still make the same mistakes over and over. So, I asked several experienced investors from around the United States:

What are the biggest mistakes founders make when pitching for seed funding?

And here’s what I heard from these seed investors: most entrepreneurs make similar mistakes (and all can be avoided). Read the expert-investor responses below, and follow these 3 strategies to mistake-proof your next pitch. Be sure the read the “Seed Funding Action Items” at the end of each section…

1.) Do Your Homework Before Asking for Seed Funding

“It’s remarkable to me how many entrepreneurs approach us without doing any research in advance,” says Brad Feld, managing director at VC firm, Foundry Group.

And Feld isn’t alone. Most investors also find the lack of prep from entrepreneurs a bit frustrating.

Dave Knox, Partner at The Brandery

Dave_Knox1-283x300

Perhaps the biggest mistake is they way that an entrepreneur approaches. I get numerous requests where an entrepreneur reaches out to me cold. I read email so its not that I skip over these emails. But instead in almost all of these cases, I can tell that the entrepreneur has put ZERO effort into reaching out to me. They don’t customize the request. They don’t take time to read about The Brandery. And they don’t look into my connections or background to see what we have in common. Take the time to get to know an entrepreneur and target the people that are a great fit. If you spend the time to learn more about the investor, it will do wonders to your success rate.

Seed Funding Action Items:

  • Research your contact’s investor fund or investment group website
  • Read and review contact’s personal website (if they have one)
  • Researched the investor on LinkedIn and Angel List for connections or background you may have in common

2.) Focus On Building a Relationship Before Asking for Seed Funding

We’ve talked before about how to get seed funding and this first important step: build a real relationship with your potential investor. And this one sounds simple but executes hard.

Ting Gootee, Partner at Elevate Ventures says, “Seeking outside investors is no different from establishing a long-term relationship where both parties hope to realize certain benefits.” 

Ask any investor out there, and I’ll bet that anyone with a heart would agree.

 Dr. Tony Ratliff, Angel Investor

Tony Ratliff The first number one is that the entrepreneurs try to close the deal on the very first contact or pitch. When really they should be trying to point out the problem, share their story and get us to take the next step. It’s kind of like dating -you don’t ask to get married on the first date. Most investors want to invest in the entrepreneurs, not necessarily the idea because start-ups pivot all the time. So don’t try to get married the first time you approach an investor.

Seed Funding Action Items:

  • Be genuinely interested in other people. Ask questions.
  • Seek to understand your potential investor’s motives. What are they looking for in an investment? How do they want to get involved (beyond writing a check)?
  • Be vulnerable. Share a personal story.

3.) Prepare Your Seed Funding Pitch

Every seed investor has his or her own interests and qualities they look for in a seed investment.

“Have some level of proof of concept,” says Scott Orn, Partner at Lighthouse Capital. Others look for their own must-have ingredients to clear the threshold into that land of “OK, I’m interested…”

Ezra Galston, VC at Chicago Ventures

Ezra Galston

One of the biggest mistakes are entrepreneurs who focus the majority of their time/energy on explaining market sizes or revenue models or other ethereal subjects. We will spend our time researching your market and drawing our own conclusions. We care about how an entrepreneur executes and want to hear data points on accomplishments, growth, and traction, whether those take the form of revenue, users, or team. But more than bullets, we care about how those accomplishments happened – because, again, the focus is on executional ability

 Andy White, Partner at the VegasTech Fund

Andy White

There are a ton of great products out there that no one knows or cares about. You have to show that you understand your market and the demand for a solution to a big problem. Then you can show off your really cool tool.

Seed Funding Action Items:

  • Research your industry inside and out.
  • Practice your pitch with a trusted advisor.
  • Do you know what your investor is most interested in learning about your business? If not, it doesn’t hurt to ask.

The most important thing is to keep improving your pitch for seed funding. If you a potential investor decides to pass, follow up and ask why. It’s ok to request feedback on your pitch and presentation, too.

So, when you venture out to raise seed capital, don’t pass up the opportunity to learn something.

Have you made your own mistakes in your quest for seed funding? What lessons have you learned?

Learn more about seed funding and startup fundraising with Verge! Sign up for our email list for weekly tips and tricks from the experts.

How To Re-Invest In Midwest Startups

Indiana and the surrounding Midwest has an exciting history of software entrepreneurship.

Large sales of companies like Software Artistry and Baker Hill in Indianapolis, and Resite in Bloomington, started a movement that has snowballed into a powerful Midwest startup community.

In this interview from the The Innovation Showcase, entrepreneurs and business leaders from around the Midwest share their perspective on how to keep the momentum going and re-invest in Midwest startups:

First you have to have success. And early software successes in Indiana made way for even bigger wins for the state, including an Angie’s List IPO, Compendium acquisition by Oracle, and of course an Exact Target IPO and subsequent acquisition by Salesforce.

Meanwhile, hundreds of software startups have launched. Some have folded, some have stabilized, and others have flourished.

“We’ve generated a bunch of small companies,” says Mike Trotzke, co-founder of SproutBox. “It’s time for us to start picking the winners and doubling down.”

This year’s Innovation Showcase, with more than 70 fundable companies, resulted in one company walking away with $128,000 in resources to continue their growth. We’re recalibrating venture funding in the Midwest. What else can Indiana and the Midwest do to double down on entrepreneurship?

Drop a comment below and let us know. You can also read the full transcript for the video above:

IMG_8541

 

Matt Hunckler:

We have had a lot of success here. We’ve built on the successes of Software Artistry and going back to Baker Hill. A number of the Indianapolis companies that have exited, obviously Resite in Bloomington and what that spawn was Sproutbox; and that whole movement, all the way up to Angie’s List IPO and the Exact Target’s IPO, and subsequent acquisition.

What do you think that means? What do you think those exits and those pieces mean for Indianapolis and Indiana, in general? And what do we need to do to build on that momentum? It’s kinda like what do you do after you have the Super Bowl here? Do we go for the next 2.5 billion dollar exit? Or we just keep getting small wins?

John Wechsler:

John Wechsler, founder of Launch Fishers.

I have some very strong feelings about this, and I have— for the last couple of years when I was with Mike Kelly and Jason Vasquez, and the others at Developer Town. Couple of years ago, I’ve seen..guys, 2014 is gonna be the bellwether year for entrepreneurship. And in actual, it’s 2013.. turns out it’s probably gonna be 2014— the bellwether year for entrepreneurship and startups in Indiana. For many reasons, one, the ecosystem that’s building. But, several of these major exits and liquidity events that have created dozens, if not hundreds of millionaires with the temperament, the interest and the financial capacity go out and try at themselves. And that is first and foremost, what you need in an ecosystem. You have to have that success and that, you have to have those that were successful go out, try it again and pull others into this wacky world of entrepreneurship, right? And that’s really what makes Silicon Valley so special. It didn’t just happen in the last ten or twenty years. If you think that, you’re misinformed.

The first place I went to when we moved out there was— in fact, JP and I might have actually done it together.. the Palo Alto-Hewlett Packard garage. And literally stood there and just look at it and thought, “man, forty years ago at that time.” Now, forty-two years ago it all started right there. And it took several spin-outs, and exits, and multi-billions of dollars coming and going to build that ecosystem. And it won’t happen overnight. You have a few of these happen. You have a period of entrepreneurial kind of growth. And then it happens again. And we can already see those next special companies that are growing up right now. I won’t embarrass anyone or take my shots at naming the ones that I think are gonna win but man, you can see this.. building. And there’s a lot of excitement and a lot of opportunity.

John Hanak:

John Hanak, Director of Purdue Research Foundation.

And I think, John, related to that is when you look at what’s happened and where there have been exits, almost all the founders, almost all of the key employees are still here. I mean, they’re still in Indiana; they’ve not left. We have cases— John Wechsler, that left and came back which is awesome. I’ll always remember that first time I called you when I found out you were coming back. It was so critical.

We have successful companies in Indiana that have been started by people that came back from Silicon Valley. Dan Haze, up with the Health Call in Merrillville. Jeff Reedy was Scale Computing. We have lots of examples. And what’s happening is.. what I really believe is happening as you talk to everybody that does come back or that doesn’t leave; they’re staying for quality of life. And that is just absolutely huge aspect to this ecosystem in Indiana.

Mike Trotzke:

Mike Trotzke, co-founder of SproutBox.

So, our first fund is now about five years old. And we are definitely focused on what I think is that next phase. This has been a topic of conversation with us a lot. We’ve generated a bunch of small companies. Two, three, four, five, six people companies. And it’s time, from our standpoint, for us to start picking the winners out of those. Start doubling down into the companies that we think are really gonna be the big ones. And, I think a lot of these ecosystems that have popped up— the small, little groups, are in that phase.

Whether it’s now, it’s time to look at the companies, call the herd, get behind some. Take advantage of the fact that there’s a ton of new capital available in the state; to help fuel the growth of some of our winners, and take them to the next level. I think the co-working models are essential, but the next phase is to start having companies at least in Bloomington that are in bigger shops; going out and getting their own office. They’re starting out 10 employees, 20 employees, and 30 employees so that we can get the cycle going. Like what happened with ReSave, we are the only one. We built this company, we sold it and reinvested. We want to take that 20 companies we’ve created, and do that with all 20 of them now. And that’s kind of our next phase. So, I’m very optimistic about that, given the climate of the rest to save Indiana.

Jeb Banner:

Jeb Banner, CEO of SmallBox.

Just to kinda go back to what John (Hanak) was saying about quality of life, I think that can’t be underestimated. I think that a lot of focus is given to funding and talent. And that’s great! We need those things in terms of the ecosystem. But, when you think about the other side of that— it’s the habitat, right? Anyhow, that’s the co-working spaces, but also the cultural trail. It’s the bed and breakfast going into Broad Ripple finally, right? A place people can actually stay.. about going either far north or for south. So, I think that the tech community, and especially the people with a lot of money which now we’ve got a bunch more or soon have a bunch more— need to look at that ecosystem. Think of the quality of life aspects if they really wanna make a long-term bet. Make those investments as much as the investments in the company, and find ways to build-up that infrastructure so that this is the habitat for the talent. And I think that was the approach of the Speak Easy that we took is let’s just build the space. We’re not gonna tell them really what to do. And the animals came. You know, they happen. It took over. They ran the zoo now. And I think, that’s the way it works.

Mike Kelly:

Mike Kelly, Managing Partner at Developer Town.

So, I think from my perspective, one of the things in terms of the people that we talked to who are starting companies today versus the people we talked to three years ago– it’s just night and day difference, right? And it’s not only the people locally who are now just becoming serial entrepreneurs, but it’s also the people who look at Indianapolis– who wouldn’t have looked here before, right? So, the number of deals that we see potentially coming out of Chicago, who would have never looked at Indiniapolis three years ago, but now, legitimately look down here and say, “well hey, we’ve heard about Indianapolis and some of the things you guys have going in there.” It’s really nice news once company sell for really big, large amount of money, right? That gets attention. And so, it’s not only the capital that is created here and stays here, hopefully. It’s also what that attracts to the space. And I think, Verge— and everything that you’ve done over the last couple of years, and there’s a ton other groups at that point. There, just that attention, and the attention of Startup America and the attention of some other things that are going on here, creates a gravity that brings in better opportunities which is ultimately what drives the wheel, right? The better ideas you get, the more people out there pitching. And you know, as those flow to the top, that’s how you drive that engine. And I think, for us, it’s really great to work with these companies. And to move that forward. But, it all starts with those exits coming back here and working here, right?

 

What’s the Biggest Mistake Entrepreneurs Make When Pitching for Seed Funding?

seed funding mistakes

Seed funding isn’t easy to come by, especially when most founders handicap themselves from the get-go.

Despite the wealth of knowledge online and platforms like Angel List and Gust, I hear that founders still make the same mistakes over and over. So, I asked several experienced investors from around the United States:

What are the biggest mistakes founders make when pitching for seed funding?

And here’s what I heard from these seed investors: most entrepreneurs make similar mistakes (and all can be avoided). Read the expert-investor responses below, and follow these 3 strategies to mistake-proof your next pitch. Be sure the read the “Seed Funding Action Items” at the end of each section…

1.) Do Your Homework Before Asking for Seed Funding

“It’s remarkable to me how many entrepreneurs approach us without doing any research in advance,” says Brad Feld, managing director at VC firm, Foundry Group.

And Feld isn’t alone. Most investors also find the lack of prep from entrepreneurs a bit frustrating.

Dave Knox, Partner at The Brandery

Dave_Knox1-283x300

Perhaps the biggest mistake is they way that an entrepreneur approaches. I get numerous requests where an entrepreneur reaches out to me cold. I read email so its not that I skip over these emails. But instead in almost all of these cases, I can tell that the entrepreneur has put ZERO effort into reaching out to me. They don’t customize the request. They don’t take time to read about The Brandery. And they don’t look into my connections or background to see what we have in common. Take the time to get to know an entrepreneur and target the people that are a great fit. If you spend the time to learn more about the investor, it will do wonders to your success rate.

Seed Funding Action Items:

  • Research your contact’s investor fund or investment group website
  • Read and review contact’s personal website (if they have one)
  • Researched the investor on LinkedIn and Angel List for connections or background you may have in common

2.) Focus On Building a Relationship Before Asking for Seed Funding

We’ve talked before about how to get seed funding and this first important step: build a real relationship with your potential investor. And this one sounds simple but executes hard.

Ting Gootee, Partner at Elevate Ventures says, “Seeking outside investors is no different from establishing a long-term relationship where both parties hope to realize certain benefits.” 

Ask any investor out there, and I’ll bet that anyone with a heart would agree.

 Dr. Tony Ratliff, Angel Investor

Tony Ratliff The first number one is that the entrepreneurs try to close the deal on the very first contact or pitch. When really they should be trying to point out the problem, share their story and get us to take the next step. It’s kind of like dating -you don’t ask to get married on the first date. Most investors want to invest in the entrepreneurs, not necessarily the idea because start-ups pivot all the time. So don’t try to get married the first time you approach an investor.

Seed Funding Action Items:

  • Be genuinely interested in other people. Ask questions.
  • Seek to understand your potential investor’s motives. What are they looking for in an investment? How do they want to get involved (beyond writing a check)?
  • Be vulnerable. Share a personal story.

3.) Prepare Your Seed Funding Pitch

Every seed investor has his or her own interests and qualities they look for in a seed investment.

“Have some level of proof of concept,” says Scott Orn, Partner at Lighthouse Capital. Others look for their own must-have ingredients to clear the threshold into that land of “OK, I’m interested…”

Ezra Galston, VC at Chicago Ventures

Ezra GalstonOne of the biggest mistakes are entrepreneurs who focus the majority of their time/energy on explaining market sizes or revenue models or other ethereal subjects. We will spend our time researching your market and drawing our own conclusions. We care about how an entrepreneur executes and want to hear data points on accomplishments, growth, and traction, whether those take the form of revenue, users, or team. But more than bullets, we care about how those accomplishments happened – because, again, the focus is on executional ability

 Andy White, Partner at the VegasTech Fund

Andy White

There are a ton of great products out there that no one knows or cares about. You have to show that you understand your market and the demand for a solution to a big problem. Then you can show off your really cool tool.

Seed Funding Action Items:

  • Research your industry inside and out.
  • Practice your pitch with a trusted advisor.
  • Do you know what your investor is most interested in learning about your business? If not, it doesn’t hurt to ask.

The most important thing is to keep improving your pitch for seed funding. If you a potential investor decides to pass, follow up and ask why. It’s ok to request feedback on your pitch and presentation, too.

So, when you venture out to raise seed capital, don’t pass up the opportunity to learn something.

Have you made your own mistakes in your quest for seed funding? What lessons have you learned?

Learn more about seed funding and startup fundraising at The Innovation Showcase on July 10. Grab your all-access pass here:http://theinnovationshowcase.com

 

13 Skills You Should Learn Before Starting Your Business

We all have business skills we wish we learned sooner. For some it’s sales, for others it’s office politics. For me it’s how to fix a damn paper jam. Regardless of your situation, one thing is clear: We all could stand to learn things sooner rather than later. Today, 13 Entrepreneurs answer the question:

What’s one skill you wish you learned earlier that would’ve helped you launch your business?

John Rood1. Basic Bookkeeping

Starting as a solopreneur, it was easy to keep books in a simple spreadsheet. However, I kept at that for a year longer than I should have. It’s worth investing a couple thousand upfront to get someone to set up your books and accounts the right way.
- John Rood, Next Step Test Preparation

 

Corey Blake2. Grace

I have always been agenda driven. As I get older, I find that I’m learning the skill of grace, which is about being present with people where they are, with no agenda. So rather than approaching sales from the standpoint of closing, grace allows me to approach sales from the standpoint of alignment. That saves massive headaches down the road, breeds confidence and adds value, which adds revenue.
- Corey Blake, Round Table Companies

 

Mark Krassner3. Leadership

When I first started out, I thought that leadership was about being nice and making people’s lives as easy as possible. While I do still think it’s paramount to be kind and compassionate, I’ve learned that leading means challenging people, and encouraging them to do something that’s outside of their comfort zone. This perspective shift has helped accelerate my business at high-octane speeds.
- Mark Krassner, Knee Walker Central

 

Martina Welke4. Adaptability

In retrospect, I think one of the things that slowed us down in the early days of our business was our attachment to our original vision and expectations of how it would evolve. Instead of learning from moments of resistance along the way, we tried to force our assumptions into reality. Now, I try to remain open to surprises and change course accordingly.
- Martina Welke, Zealyst

 

Ryan Flanker5. Focus

Avoid spreading yourself too thin and focus on one thing instead. At VerbalizeIt, we try to avoid the word “and,” as in, “we focus on this and this and this.” We made mistakes early on by trying to create a solution for every customer use case. Eventually we learned that doing so was not sustainable. It’s okay to say no and to focus on one’s core vision.
- Ryan Frankel, VerbalizeIt

 

dave-nevogt6. Reverse Thinking

Earlier in my career and when I first launched my business, I thought very much in terms of the “next step” without giving as much attention to the impact those decisions would have on my business down the road. Now, my decision making process involves reverse thinking. It works by taking the desired end result and building the required steps leading up to it.
- Dave Nevogt, Hubstaff.com

 

Brittany Hodak7. Graphic Design

I own a content creation company but have no design experience. When it’s difficult to express an idea or concept, I have to try to hack my thoughts together on paper or in PowerPoint. I wish I’d taken the time to learn InDesign in college.
- Brittany Hodak, ZinePak

 

Andrew Thomas8. Risk Assessment

The ability to accurately assess risk is a skill I have learned over time yet wish I had learned earlier. I can certainly point to opportunities that I did not pursue because I overestimated the risk. You can take a few more chances when you are young and I wish I had approached those opportunities from the “why not” perspective that I do now.
- Andrew Thomas, SkyBell Technologies, Inc.

 

Brennan White9. Sustained Networking

Early on in my career, I thought of networking as a discreet task that could be started and finished. I’ve come to learn that networking never ends and is simply an extension of relationship (and friendship) building, which is something I’ve always been great at. Once I took the label away and realized I already possessed the needed skills, my businesses have taken off in new, exciting ways.
- Brennan White, Watchtower

 

Liam Martin10. Employee Management

The skill I’m really trying to learn is how to become a good manager. I’ve discovered that employee management is a lot more difficult than I thought, and that to continue to scale I have to spend more time managing people than actually doing tasks. For entrepreneurs this can be difficult, and if I had worked under a good manager previously it probably would have helped me considerably now.
- Liam Martin, Staff.com

 

Janis Krums11. Coding

Finding quality developers inexpensively is really difficult. Had I known how to code, I could have not only built a prototype of our business model much faster, but also increased the rate at which we developed the actual platform. What at times has taken months to complete would have taken days — which would have allowed the company to quickly understand what worked and what didn’t.
- Janis Krums, OPPRTUNITY

 

Juha Liikala12. Delegation

Money is always tight in the startup phase. Don’t let that lure you into trying to do everything yourself. Focus on your strengths, utilize them and delegate other mission critical roles. You might have to hire a professional, but when compared to the fact that you might not launch at all because of your DIY approach? It’s just not worth it. Value your time and delegate.
- Juha Liikala, Stripped Bare Media

 

Ioannis Verdelis13. Marketing Savvy

I should have learned more about marketing and PR. It is now a strong part of our business, but we learned how to do this by making dozens of mistakes first.
- Ioannis Verdelis, Fleksy

Winning Startup Trade Show Ideas from The Innovation Showcase

It’s been a big year for Santiago Jaramillo and the BlueBridge Digital team. The kind of year that landed him on the Inc. 30 under 30 list.

Startup Conference Tips to Win

Santiago Jaramillo, Founder and CEO of BlueBridge Digital.

A year ago, BlueBridge had fifteen clients and three employees. They now have over 110 clients and more than fifteen employees, but that’s only the beginning–with plans to add 199 jobs over the next nine years, Santiago and BlueBridge are only going to continue accelerating.

And when Santiago pitched at The Innovation Showcase in July 2013, the team was already well on their way to growth mode: they took home 1st place in the Early Stage Startup category, attracted lots of attention from the startup community in Indiana (and around the country), and have continued to innovate in the mobile space.

So when Santiago shared with me how he and the BlueBridge team prepared for The Innovation Showcase, I knew it was advice worth heeding.

Santiago explained that three things take the most effort and time to prepare for startup conference and events: the exhibit, the team, and the pitch. Catch the full interview and my takeaways below.

Winning Startup Trade Show Ideas

Startup Trade Show Idea #1: Be Intentional with Your Exhibit

Attendees at most conferences won’t have any clue what your company does when they walk through the door, so start with the pain or problem you solve. Try to avoid industry jargon. Your goal is to be understood–to create an “Ah, yes, I see!” moment–not to speak over attendee’s heads.

BlueBridge delivers Mobile Apps as a Service (MaaaS?). Which may or may not come across clearly, even to a techno-literate audience.

Keep your exhibit simple, like your pitch, Santiago said. Put a lot of thought into the few items you will bring, and keep attendees laser-focused on the real value you provide–not the chintzy usb drive the booth next to you is giving away.

Startup Trade Show Idea #2: Be Intentional with Your Exhibit

Startup teams are tight-knit, but that doesn’t always mean that everybody is on the same page going into scrutinous environments like The Innovation Showcase. Prep your team with finely-tuned talking points to make sure the message is consistent. Rehearse.

“When you start describing what you do,” said Santiago, “There are just so many solutions out there that people wonder why you should even exist.”

So why does BlueBridge exist?

“There are more smartphones sold than babies born in the world,” said Santiago, chuckling. “It makes you laugh, but it captures their attention…and they’re willing to listen to how we’re solving that issue.”

Key Startup Trade Show Idea: Ask yourself what key metrics you can share, and how you can create buy-in from attendees with your reason for being.

Startup Trade Show Idea #3: Perfect the 60 Second Pitch

Startup Conference Pitch

Santiago Jaramillo and his partner Adam Weber delivered a conversational, easy to understand pitch that really resonated with the judges.

At The Innovation Showcase, companies only have 60 seconds to pitch–but since founders really only have about a minute to get the point across any time they pitch, the lightning-fast 1-minute pitch gets a lot more use than you might think.

“Put yourself in the shoes of your audience,” said Santiago. “You have to really simplify and condense.”

Key Startup Trade Show Idea: Keep your pitch simple. Really simple. Questions afterward do not always mean the pitch was unclear–often, they demonstrate real interest.

Santiago’s pitch style earned him a win at The Innovation Showcase–and if you’re thinking of applying for the 2014 Showcase, his advice is certainly worth incorporating into your pitch: “Be very specific, clear, and simple. Those people don’t know the industry and buzzwords like you do.”

“You want to be either loved or hated, but not ignored or confused!”

The Innovation Showcase is accepting exhibitor applications until April 30, 2014. Get your application in now for a chance to secure one of the first 15 spots!

Startup Investor Insights: Elevate Ventures’ Ting Gootee

When you score as much as the Seahawks did in the Super Bowl, the way people refer to you starts to change. They call you things like “dominant,” “effective,” and “the best.” 

Elevate Ventures has been called many of those things.

That’s why I was so excited to hear what Elevate Ventures’ Vice President of Investments, Ting Gootee, had to say about what she considers when evaluating deals–and what startup founders should know about how Investors approach deals–on one of our recent Investor Panels.

Startup Investor Insights: Elevate Ventures’ Ting Gootee

Investor Insights Elevate Ventures Ting Gootee

Ting Gootee, VP of Investments at Elevate Ventures

Not All Money Is Created Equal

If Firm A agrees to the same terms as Firm B, why would their investments be any different?

Because, as Gootee pointed out, not all investors bring the same resources, network, and commitment level to the table.

“Look at it as a partnership,” Gootee urged founders. “When you take money from someone, they are in this with you for a reasonably long time.” Startup funding is not marriage, but the investor panel agreed: it’s close.

As with any relationship, Gootee said, you’ll want to look for three Cs when evaluating your potential investors.

The Three Cs of a Healthy Investor-Startup Relationship:

  • Competence. Do your due diligence on your investors. You can bet they’ll be doing theirs on you.

  • Character. You’ll depend on

  • Chemistry. Are your goals aligned well, or is it more of a loose fit? You’ll want your investors to be in lock-step with your goals so you can leverage your relationship with them effectively.

“Know that you are in this for the long term, and know that there will be bumps in the road,” said Gootee. But, as she illustrated, if you have kept the Three Cs in the front of your mind as you secure funding, you’ll encounter those bumps in the road with the confidence that all parties involved want the same result.

What Makes Investors want to Invest?

As Gootee pointed out, you should not ignore the human side of the investor-startup relationship. And her investment team at Elevate certainly doesn’t.

  • Gootee looks for “Someone that is comfortable managing the human side of business. As early stage as they are, there is a lot of subjectivity in finding the right fit.”

  • The second thing Gootee and her team at Elevate Ventures look for in a founder is leadership. But, as Ting so rightly asked, “What does that mean?”

    • When she evaluates a founder, Gootee wants to see servant leadership. “It’s not just about you, as the founder,” Gootee said. “It’s about the resources you can bring to your team.” That, Gootee said, is how companies can really grow and scale.

Gootee’s fellow panelist, Gerry Hayes of Slane Capital, agreed with Gootee and explained that the difference between a founder and a CEO can mean the difference between whether or not an investment will be made.

Both investors concur that the founder may not be the person to scale the startup–which really gets at a key insight I got from this panel:

  • When they’re evaluating founders, investors want to see someone who is willing to acknowledge that, although they built “their baby” until a certain point, in order for it to grow bigger than themselves, they may need to assume new, different roles. Be humble.