Why are investors unapproachable & unresponsive? And how to fundraise from them?

There are several grievances early-stage founders have against startup investors, especially related to approachability & communication. Some of them are -- investors never respond to emails, they can at least acknowledge founder emails, they vanish after first call or meeting, and worse, they are snobs. Of course there are other criticisms, like investors don't know what they're doing, they fund bad startups, they don't respect cash or profitability, etc. -- but these are topics of another post.

Coming back to the complaints on approachability & communication, the answer is that these are both right and wrong. Some investors are good at this, some are bad. However, I'll try to provide some perspective on why a well-meaning investor may seem unapproachable or a snob.

Investors are nearly as busy as entrepreneurs

Let's first lay out a typical day for a startup investor. In terms of new deal flow, a good investor will daily get tens of cold emails, lots of Linkedin messages and some referrals. In addition to this, many founders will ping on email, Linkedin, Whatsapp and phone calls for an update on a discussion the investor has already had with them. A high share of calendar time will already be booked for calls/meetings with startups of interest. This is all over and above the time an investor spends daily on portfolio management, startup events, operational activities, LP updates, industry research & reading, and writing (if they do it). Many investors also travel a lot for work.

Clearly, investor lives are as busy as entrepreneurs' and time is a valuable currency for them too. Many investors I respect tell me that if they were to respond to every ping they get, they would hardly have enough time to properly take care of their other responsibilities.

Investors salvage their calendar time to varying degrees

Knowing that they cannot respond to everyone, each investor draws a personal line on who they will respond to, in how much detail and who not at all. For example, some say they don't respond to cold emails unless the startup is within their thesis, absolutely reply to every referral or known connection, and always communicate a well-thought out rejection. Some others only engage with startups that fall under their thesis, choose to not even respond to most referrals, and admit they're able to only communicate a fraction of rejections. Some others say they engage with only startups of interest, and use radio silence to communicate rejection to everyone else. Most of them are doing this to salvage calendar time and not to act snobbish.

However, these are widely varying communication approaches and leave founders confused. For example, they cannot be sure if the radio silence is a no, or if the investor missed their ping, or if they're interested but too busy at present to respond. So how can a founder handle this scenario?

But some entrepreneurs do push the communication envelope too much

Before we get to how a founder can handle the scenario, it's also important to note that while most founders are patient & professional in interfacing with investors, quite a few founders come across as pushy or disrespectful of an investor's time. Examples include:

1. Keep pushing for an in-person meeting or call to get to know each other without sending any reading material (even when they've approached the investor)
2. Include cherry-picked data or only vanity metrics that clearly don't provide any view on the startup's growth/scale
3. Ask for an NDA to be signed upfront even when there's no obvious IP
4. Excessive follow up (like drip campaigns) on Whatsapp, phone calls, emails or Linkedin for status update on investor's decision
5. Keep following up immediately after a 'no' has been communicated

I understand founders do 1-3 above due a fear of ideas/plans being stolen or reaching a competitor. In some founders' words, they were doing so to filter the right investor who is fit for them and/or to ensure their ideas don't reach competition. While I could say ideas are dime a dozen and pace of execution is what matters, I empathize with this fear founders have (especially first-time founders). Having said that, there are respectful ways to work around this.

Points 5-6 above are just an irritant and founders risk losing their personal equity with the investor. Don't make investors feel you're a difficult person to work with, else any chances of engaging in the future also go out the window.

So how can founders approach this scenario?

So finally, coming to a few tips on how founders can handle communication with investors and also manage confidentiality to an extent, if they have to:

1. Avoid cold outreach, if you can

First & foremost, try to get a referral to the investor. A solid referral not just pushes you up the pecking order in planned responses, it also makes an upfront strong case in favor of the team. If you cannot get a referral, if possible, attempt to meet up at a local event and interact with the investor. If even that's not possible and you need to go cold, draft a strong email with a well-crafted brief and a deck that tells a good story.

One could also say that getting a referral is a first testament of your team's resourcefulness. Admittedly though, it's a weak point IMHO.

2. Don't come across as unwilling to share information

If you want to avoid sending your full deck, make a short teaser that talks about the team, problem, product/offering and some top-level metrics. If you're worried that the investor may have a competing investment, also ask in the email if there's any potential conflict with their portfolio. If the investors have interest, they'll reply and you can then send more details or even ask for a meeting.

If you really have something to protect as IP, leave that part out of the teaser or the deck, mentioning that for sharing that bit you'll need to sign an NDA. But usually, even if you were to represent the proprietary tech as a blackbox, you can always talk at length about the problem, current landscape, benefits of your product, etc. to gauge investor interest. If the what the IP achieves doesn't excite the investor, how it does so would be immaterial anyway.

3. Don't push for get-to-know-you meetings without sharing anything

As explained above, investors are busy and get pitched a lot, so the chances of them taking get-to-know-you meetings are very less, unless you come with a solid referral. It's a huge time waste for the investor (and you) to take the call/meeting and realize in a few minutes that you both are not fit for each other. So understand and value your & their time, and send them something worthwhile to act as a first filter. 

You can always research about an investor from their portfolio, visiting their websites or talking to their portfolio firms. Don't make investors give you a detailed introduction for you to make a fit judgement, before being forthcoming with information yourselves. It's not often they'll do it as they'd rather spend the same time talking to another startup where there's an obvious fit.

If you think your chances are better if they 'just heard you once', then your deck needs to do a better job. Make it more impactful. Learn to make better decks!

4. Be patient with the process

Investors have to follow due process when they invest. This includes doing sectoral research, internal discussions, background checks, stress testing business & revenue models, etc. And yours is only one of the many startups they're evaluating at any time. So it's usually tough for them to come back to you pronto. So once engaged, ask them for the next milestone and potential timelines and then follow up then.

Or course, if you have updates to share and positive news to strengthen your case, do it anytime. It always helps to show positive execution data while you're under evaluation by the investors. 

5. Learn to take rejection

As you'd understand, a major portion of a startup investor's time goes in rejecting deals. Good investors are typically able to invest in <1% deals that they come across. At the same time, anecdotes from many successful founders will tell you that they were rejected by tens of investors before finding one that believed in them.

So take rejection from an investor in a professional & mature manner and don't irritate them with immediate follow-ups. Sustained radio silence from an investor despite well-spaced pings by you is a rejection. Ask what your venture lacked, if the investor hasn't shared feedback, and work on plugging the gaps for a few months before going back to them with a better story. Keep your chances alive by maintaining a cordial relationship.

6. Use the feedback to reflect, re-validate and pivot

While funding is the best outcome of a your interaction with investors, you will also receive a lot of quality feedback in the process. Keep your eyes and ears open to what investors are trying to tell you (sometimes they won't say it in as many words), and upon rejection don't just lament that investors don't get it.

Sure, you may end up interacting with some investors who may not have a clue about your sector, business model or even tech startup investing. But if you have a wide enough funnel, there will be some common conversation threads. The best you can do for yourself and your startup is to be open & honest to the feedback, work on it, pivot if you need to, and eventually prove the doubters wrong.

....

That's about it. Hopefully this post has provided you some insights into the seeming unapproachability of & lack of communication by investors, and you find the tips useful in navigating around those.

Wish you the best with your venture!

....

Ankur Shrivastava is a Founding Partner at Globevestor.VC, an early investor in 25+ startups in India & US, including Zoomcar, Springboard, Flintobox, Rubique, and MyMandir, among others.